Get Rich Slowly

Get Rich Slowly
“Get rich slowly” is a book title that expresses my advice on personal finance. For most of us, get rich quick schemes are a bad idea. Market insiders have a way of discovering and grabbing ‘free money’ before the average person is aware of the opportunity. By the time you hear of a scheme on TV or in a book the ‘low hanging fruit’ has long since been picked. But if you will give up the ‘get rich quick’ idea there is a way for the average person to accumulate significant wealth.

First you must decide to save and invest rather than borrow and spend. Most Americans, especially young adults, choose the latter. The average credit card balance in America (ca. 2003) is $8000. According to the government, the average personal savings rate in the U.S. is zero. If you cannot resist buying unnecessary stuff on credit you can forget getting rich and focus on paying interest. Even a good income can easily be consumed this way. In trying to resist the ‘siren song’ of consumerism think about the happy times in your life. You will realize that good memories revolve around experiences…as in personal accomplishment, nature, sports, etc. or memories of relationships… as in family, friends and lovers. On the other hand, the thrill of buying stuff wears off quickly. The exception is buying a home. A home is usually a good investment even if you have a mortgage.

People with good incomes can most easily invest…unless they are too far in debt from self-indulgent spending habits. Low wage earners can still squeeze out a few dollars each month if the discipline is there. After all, in America, people who claim they can’t buy food for their kids still find money for beer, cigarettes and cable TV. Not everyone will accumulate a million (2006) dollars but a nest egg of $50,000 or $100,000 is possible.
Some ordinary people have succeeded. Two blue collar employees at a GE plant were featured on TV because they became millionaires by age 55 by taking maximum advantage of the company 401K stock sharing plan. There are many millionaires being created by 401K plans where people take full advantage and make wise investments. Here is how it is done:

1. To prevent taxes from reducing return take maximum advantage of tax deferred savings. Try to find an employer who has a 401K plan with matching contributions. The best would be one that matches with cash rather than company stock. The 401K rules allow up to 10% of pay to be invested by the employee and another 5% added by the employer for a total of 15% of pay. These deposits and any profit they generate are not taxable until funds are withdrawn. Forget those get-rich-quick schemes and the lottery because this is the best deal the average person will ever find. If you don’t have a 401k then anyone can start a tax deferred IRA account, though you do not get help from an employer.

2. What is the best investment for your account? The long term (75 year) average for the stock market is about 11%. This is double or more what you can get in an interest bearing account. Picking stocks is too risky. Instead, use the solid long term average return of the market. The best vehicle for this is an S&P 500 index fund. This is a fund that buys the stocks of a group of 500 reputable companies carefully selected to represent the entire market. Thus you are extremely well diversified and the fund will track the overall market. Since no genius (and highly paid) stock pickers are needed to manage the fund the fees on this fund will be minimal. The caveat is that the 11% average includes annual swings of 30% or more up and down and periods of slow growth. However, since you are investing for the long term you should not get nervous about these temporary and unpredictable gyrations. After all, temporary gains and losses are only hypothetical until you cash out. Incidentally, I do not like 401Ks when the only investment is your company’s stock. You could do well like those GE guys or it could turn out to be another Enron.

3. Do not try to “time the market”. No one, not even the experts, knows when the market will reach a bottom or a peak. Instead you should use the technique called “dollar cost averaging”. This simply means that if you invest the same amount each payday into stocks your dollars will buy more shares when prices are down and fewer shares when prices are up. Thus you have a built in efficiency over the long haul and it fits nicely with a 401k payroll plan.

4. You will make use of the miracle of compounding. Compounding means your profits are automatically re-invested and begin to earn profits. If you make regular deposits and get a good return your account will eventually be earning more than you are depositing. This is like free money. If you continue, the day might come as you near retirement that your account will be earning more money even than your total pay. How is this possible? Example…if you accumulate $500,000 and get a return of 11% you will net $55,000 a year in tax deferred income. The sooner you start investing, the better. The math shows that investment growth is very sensitive to time. It is like an accelerating locomotive…it is slow off the starting line but in time an enormous momentum can be achieved.

In conclusion, we have shown a way whereby ordinary workers can accumulate large sums over time. The IRS’s deferred taxation of 401K and IRA accounts is a gift to the average person. The caveats are that you have to give up the “instant wealth” idea and apply some fiscal discipline. I do not suggest saving is easy. I can remember my younger days when ‘fiscal discipline’ took a back seat to ‘lust for stuff’ and retirement was not even on my radar. However, as I look back now from my position as a senior citizen the benefits of ‘save and invest’ are obvious and achievable.

Beat the Casino!

According to our newspaper the Indiana Gaming Commission requires slot machines to payout at least 80% of money wagered. The last state audit showed the average to be 92%. I take this to mean that if I put $100 into the slot I will get $92 back, on average. If I put the $92 back in I will get 92% or $84.64 returned. If I pulled out a fresh $100 to start each session I would lose $100 in about 8 sessions of play. What we as players hope is that we will be lucky and beat the average. This is very possible for one or a few sessions. After all, if you flip a coin it can happen that you get perhaps 9 out of 10 heads initially. Over a long session though the average will take over and heads and tails will be about the same. Similarly, over the long haul, the Casino’s edge of 8% will grind you down to zero. Moral: play for fun and keep your wagering modest.

My brother told me about a gal he knew that went to Las Vegas on vacation and won $10,000. She was so thrilled she moved to Las Vegas and began gambling a lot. After a few months she was broke and her life was almost ruined.

Exciting New Technology!

Pogue’s Posts - Technology - New York Times Blog: "BOOK is a revolutionary breakthrough in technology; no wires, no electric circuits, no batteries, nothing to be connected or switched on. It’s so easy to use even a child can operate it. Compact and portable, it can be used anywhere, even sitting in an armchair by the fire, yet it is powerful enough to hold as much information as a CD-ROM disc.“Here is how it works: BOOK is constructed of sequentially numbered sheets of recyclable paper, each capable of holding thousands of bits of information. Opaque Paper Technology (OPT) allows manufacturers to use both sides of the sheet, doubling the information density and cutting costs. Each sheet is scanned optically, registering information directly into your brain. A flick of your finger takes you to the next sheet. “BOOK never crashes or requires rebooting. The Browse feature allows you to move instantly to any sheet, and move forward or backward as you wish. An optional “BOOKMARK” accessory allows you to open BOOK to the exact place you left it in a previous session, even if the BOOK is closed. BOOKMARKS fit universal design standards; thus, a single BOOKMARK can be used in BOOKS by various manufacturers. “You can also make personal notes next to BOOK text entries with an optional programming tool, called Portable Erasable Nib Cryptic Intercommunication Language Stylus (PENCILS).“Portable, durable and affordable, the BOOK is being hailed as the precursor of a huge entertainment wave. BOOK’S appeal seems so certain that thousands of content-creators have committed to the platform, and investors are reportedly flocking to the new phenomenon. Look for a flood of new titles soon.”Link"

Why do they hate us?

Why do they hate us? Tony Blair talked about the London terror bombings…“in the West there are always those who say that if people hate us it must somehow be our own fault. There is a “grievance culture” that affects young British born Muslims who have been brought up in a country that has provided them complete religious freedom, full democratic rights and a good standard of living. These young men sit in front of their televisions and say “I will go and kill innocent people because of the oppression of Muslims”.

If you look at Muslim oppression you cannot ignore the 1 million who died in the Iran-Iraq war (1980-88) when Saddam attacked Iran and used poison gas. Iran responded with human-wave attacks showing callous disregard to the slaughter. In Iraq today…who is it that is blowing up innocents in the streets?...Muslims with a “grievance”. It has become a war of fear, greed and propaganda. The lies and agitation in the Muslim press are amplified by radical clerics spewing more lies and hatred in their schools and Mosques. This propaganda falls on receptive ears among disgruntled, restless and naïve young Muslims. The thought is then father to the deed.
  

Factoids to Ponder

The founding fathers were very concerned that political discussion or criticism of the government not be restricted and our constitution reflects this. But every time the subject of censorship in film or TV comes up it involves either sex or violence. I have never heard of a case where political speech was at issue.

In 1980 Iraq attacked Iran and the war lasted eight years. The clerics of Iran ordered suicidal human wave attacks. Saddam ordered the Iraq army to use poison gas. One million people were killed in the orgy of Muslim on Muslim violence.

According to the World Almanac 2005 nearly 70 percent of black children are born outside of wedlock. With Latinos, the rate is almost 45 percent, whites nearly 30 percent, and Asians 15 percent.

Health care in Europe is allegedly better than in America even though Europe spends only half as much per person. No one seems able to explain this mystery.

We now spend about $10,000 per student per year to educate our kids. So if Junior can’t read by the fourth grade then $40,000 of taxpayer money is down the drain. Again, Europe allegedly does this for about half the cost.

You may be only one person in the world, but you may also be the world
to one person.

Clueless Goobers Vote

Dilbert creator Scott Adams has a great entry on his blog about his fervent hope that a secret society of puppetmasters is really running things, instead of the miserable morons (of both stripes) in Washington.

He says:" My favorite conspiracy theory is the one that says the world is being run by a handful of ultra-rich capitalists, and that our elected governments are mere puppets. I sure hope it’s true. Otherwise my survival depends on hordes of clueless goobers electing competent leaders. That’s about as likely as a dog pissing the Mona Lisa into a snow bank."

My own comment is this: Democracy is such a sacred cow we never hear any criticism. Consider a person with no education, no knowledge of history and who pays no attention to news or current events. That person's vote counts just as much as yours. Isn't that great?

Potato Bugs

One night in 1963 I was on door watch in a building at the Mare Island Naval Shipyard. The largest, scariest bug I had ever seen came crawling toward me out of the darkness. If you remember the kids plastic 'Cootie' toy of that era, that is what it resembled. I later learned it was a potato bug, a harmless critter common in California. Here is a spoof on the bug from the web.Boing Boing: A Directory of Wonderful Things: "Q: I have potato bugs in my vegetable garden. How can I rid myself of these pesky critters?
A: Drench your entire yard with gasoline and set it ablaze. Once the fire has burned itself out and the ground has cooled, cultivate the soil to a depth of seven feet, saturate the area with battery acid and top the surface with gasoline. After a few minutes, most of the surviving potato bugs, now irritated, will burrow up for air. Set the yard on fire again, and let it burn itself out. The remaining bugs should be crisped. Add water. Only then, and only maybe, will you rid yourself of potato bugs.

POTATO BUGS AS PETS?
As most species of potato bug are good climbers and can gnaw through 12-gauge steel mesh, a tight fitting lid is required made of a good quality 16-grade galvanized sheet steel with nail holes (no bigger) to allow for air flow. The walls of the cage should be galvanized steel backed with 5/8' plywood, carefully mitered at corners and reinforced with L brackets to prevent escape. Wood screws are preferred over nails for assembly, as potato bugs have been known to ram against the walls until the nails eventually loosen from the wood and work free, compromising the integrity of the structure, and allowing the creatures to infest your house and lay eggs in your ear canal or anus.

Exxon Exec Loots Company Treasury

I submitted this letter to the Bloomington op-ed page. I think the GOP needs to be out in front of Democrats on this issue to show that as free enterprise advocates we will not tolerate corruption.

op-ed letter:
Lee Raymond, the Chairman of Exxon, recently retired with a retirement benefit worth $400 million. This is such a blatant looting of company assets that it makes a mockery of the value of work. It leads to distrust in the free enterprise system. We hear of these outrages almost every day. The stockholders own the company. These executives are not owners, they are employees. They are hired to manage the company. They are entitled to a salary, not the crown jewels. However, with the collaboration of a corrupt board of directors, the door to the company safe is wide open.

What bothers me as much as the unchecked greed is that these guys can still go around posing as great businessmen and leaders. Their self-serving books are published and they are sought after as paid speakers at Universities and conferences.

The business community, the business press and the public need to take a moral stand… even though these guys beat the legal system we should view them as corrupt and shun them in public life. No TV commentator job, no book offers, no invitation to speak at the IU School of Business.

The death of Chief Sitting Bull

In the fight with Custer at the Little Big Horn, Chief Sitting Bull was primarily a medicine man who gave encouragement to the warriors. The fighting Chiefs, most notably, were Chief Gall, Crazy Horse and Red Cloud. After the victory over General Custer in June of 1876, Sitting Bull and several thousand Sioux fled to Canada. In 1881, most of the Sioux had returned to the U.S. to live on reservations and the Indian wars were considered to be concluded. Sitting Bull also returned, reluctantly, under an amnesty agreement with the U.S. Army. For a brief time in the 1880’s Sitting Bull traveled with the Buffalo Bill Cody Wild West Show as a celebrity attraction.

In 1890, Sitting Bull was accused of agitating trouble on the reservation and a squad of Indian police were sent to arrest him. As he was being escorted from his cabin to his pony a crowd of rebellious braves gathered and tried to block the police. Shots were fired on both sides and the police retreated to the cabin. However, Sitting Bull had been wounded. A 2 hour stand-off ensued with some shooting back and forth. Then, a cavalry detachment arrived and quieted the situation. By then, Sitting Bull had died from his wounds.

An poignant footnote to this incident: During the stand-off at the cabin, Sitting Bull’s pony was waiting nearby. It was a trained one he had in the Wild West Show. The shooting caused the pony to occasionally break into it’s little routine of show tricks.

ref:Crimsoned Prairie.... by S.L.A. Marshall

Italian Cookies

For all the Italians out there or those who are lucky enough to be married to an Italian, or even to be friends of Italians.

An elderly Italian man lay dying in his bed. While suffering the agonies of impending death, he suddenly smelled the aroma of his favorite Italian anisette sprinkle cookies wafting up the stairs. Gathering his remaining strength, he lifted himself from the bed. Leaning against the wall, he slowly made his way out of the bedroom, and with even greater effort, gripping the railing with both hands, he crawled downstairs.

With labored breath, he leaned against the door frame, gazing into the kitchen. Were it not for death’s agony, he would have thought himself already in heaven, for there, spread out upon waxed paper on the kitchen table were literally hundreds of his favorite anisette sprinkled cookies.
Was it heaven? Or was it one final act of heroic love from his devoted Italian wife of sixty years, seeing to it that he left this world a happy man? Mustering one great final effort, he threw himself towards the table, landing on his knees in a crumpled posture. His parched lips parted, the wondrous taste of the cookie was already in his mouth, seemingly bringing him back to life.

The aged and withered hand trembled on its way to a cookie at the edge of the table, when it was suddenly smacked with a spatula by his wife.....“Don’t touch!” she said, “They’re for the funeral!"

State of the Union speech 2006

When the President mentioned his failed initiative to fix social security the Democrats drowned him out with their gloating applause. The Democrats refuse to make counterproposals because they know there is no painless solution. So all we hear from them is partisan criticism. What a spineless, self-serving party they are!

...Such stuff... As dreams are made on

We are such stuff As dreams are made on and our little life Is rounded with a sleep...'
--From The Tempest (IV, i, 156-157)
[Jump to the quote in the text of the play]
Prospero has consented to the marriage of his daughter and Ferdinand in this whimsical play about reconciling with family, forgiveness, and faith in the future. Prospero lives on a magical island with his daughter, Miranda, and a host of spirits and sprites. He was banished by his brother over a decade ago, and has now used his magic to cause the ship on which his brother and King Alonso and his entourage were sailing to come under his influence. They have been shipwrecked on Prospero's island, and a series of magical events occur. When Miranda and Ferdinand are about to marry, Prospero speaks the famous line which celebrates that uniquely human blend of mind and matter.
Themes/Keywords: dreams, magic, spells"

Carly Simon put out a nice song called "The stuff that dreams are made of". Have you noticed how many song lyrics play off of well known phrases?

William Shakespeare | Yond Cassius has a lean and hungry look

William Shakespeare | Yond Cassius has a lean and hungry look: "'Yond Cassius has a lean and hungry look,
He thinks too much; such men are dangerous.'
--From Julius Caesar (I, ii, 194)
[Jump to the quote in the text of the play]
Caesar speaks these words to his devoted friend, Mark Antony, noticing that Cassius is lurking nearby. He tells him that he distrusts lean men, contrasting Cassius with Antony, the latter who loves plays, laughter and music, as opposed to Cassius who reads too much, is never entertained, watches men and their motives far too closely, and never smiles. He tells this to Antony as a way of educating him, not out of fear of Cassius. However, Cassius has just tried to convince Brutus that Caesar is a danger to the republic, and has begun to seek Brutus' help in removing the dictator who is on his way to becoming crowned monarch. Cassius is indeed dangerous, as Caesar himself has fortold.
Themes/keywords: Danger, conspiracy, mistrust"

The Paragon of Animals

Shakespeare Quotes - Find a Shakespeare Quote Here!More Shakespeare:

Pick up a newspaper and read the bad news and you may question whether the praise in the following quote is justified.

"What a piece of work is man! How noble in reason! how infinite in faculties! in form and moving, how express and admirable! in action how like an angel! in apprehension, how like a god! the beauty of the world! the paragon of animals! And yet, to me, what is this quintessence of dust? ..."

--From Hamlet (II, ii, 115-117)