Michelle Singletary

Nationally syndicated personal – finance columnist

The worst decision I made was being too conservative when I first starting investing in my company’s 401(K) in my 20s. I took advice from a co-worker who was about 10 years from retirement and very conservative. He made me scared of the stock market, so I put most of my money in bonds. And I didn’t change that selection for years, so I missed out on some roaring times in the stock market.

Eric Tyson

Eric Tyson

Author of “Personal Finance for Dummies”

My biggest mistake was investing a few thousand dollars through a precious – metals company, IGBE. It ran ads in prominent publications, which gave it credibility, and smooth-talking people handled the phone lines. IGBE turned out to be a fraudulent business and ended up bankrupt. I learned a valuable lesson – to do lots of homework before investing through any company.

Dave Ramsey

Dave Ramsey

Radio personal finance expert and author

By the time I was 26 years old, my wife and I held real estate worth over $4 million. I was good at real estate, but I was better at borrowing money. I had built a house of cards. We went through financial hell, and lost everything over a three-year period. We were sued, foreclosed on, and finally were bankrupts. After that we said, we’d never have debt again- and we haven’t.

Doing it right: Readers give lessons in building wealth

Our recent retirement survey included several dozen subscribers who reported a net worth of well above $1 million. When we interviewed a handful, we found a common theme: frugal living. Here’s how three built their fortunes:

Early savings

Kenneth Maltz of Jericho, N.Y., taught instrumental music in public schools for 34 years and retired at 55 with a net worth upward of $1 million. He credits that nest egg to a good pension, diligent saving, and nerves of steel when investing.

“The most important thing was starting to set the money aside at an early age and not skipping a paycheck’s contribution-ever,” says Malsz, 64. “The second was realizing that not spending on a fleeting pleasure would pay off years later.”

Kenneth Maltz of Jericho, N.Y says he started investing in his early 30s

Kenneth Maltz of Jericho, N.Y says he started investing in his early 30s

Maltz says he started investing in his early 30s. He always salted away the maximum allowable contribution into a tax-deferred 403(b) retirement plan. Knowing he would have a teacher’s pension made it easier to take some risks investing in individual stocks. “What I was good at doing was not panicking when the market took a downturn,” he says. “I always believed that when times are bad and shares are low, that’s the time to buy.”

Maltz spend retirement playing clarinet in bands specializing in klezmer, a kind of jewish folk music. Musician friends who eschewed day jobs now express envy at his financial freedom. “I had to turn down a lot of music work when I was younger because I was teachning,” he says. “Now I’m in a good position.”

Savvy investing

Mary Haskin of Seattle made a lucky bet on her future when she joined Genentech, then a growing biotech company. But kept the money she made there – and made it grow- through old-fashioned smarts.

“I was the type of person to live below my means and to plan,” says Haskin, 57. That meant always paying at least one extra mortgage payment a year and carrying no credit-card debt. “I made substantial money, but I didn’t need to spend it all,” she adds.

Haskin left a three-year stint as a high-school English teacher to become a pharmaceutical saleswoman. She joined Genentech in 1997. As she climbed the corporate ladder, she gained stock options. Unlike others who cashed in their options, she held on and diversified. Three years ago, she retired with a net worth in the mid-seven figures. She now spends time with her partner doing numerous sports, volunteer activities, and hobbies.

Currently, more than half of Haskin’s money is in fixed-income funds and 16 percent is in stock mutual funds, with 5 to 10 percent more in individual stocks. She invests a small percentage of her wealth in nonfinancial investments, including individual farms in the Midwest. She credits her continued success in part to close communication with her financial planner.

Real-estate niche

Bob Berkowitz of Crescent city, Calif., has found a way to spin gold from vinyl siding. The 72-year-old rents out several manufactured homes in his rural town and surrounding areas. He has fixed up and sold many more.

“Investing in rental properties is way different in rural areas vs. metropolitan areas or big cities,” he says. “You have to make sure all parties are winners, because you are going to run into your renters everywhere.”

Bob Berkowitz of Crescent city says: “Investing in rental properties is way different in rural areas vs. metropolitan areas or big cities,”

Bob Berkowitz of Crescent city says: “Investing in rental properties is way different in rural areas vs. metropolitan areas or big cities,”

Berkowitz says manufactured homes built after 1985 are sturdy and easy to rehab. He won’t touch a property that can’t generate cash flow from the first days he rents it. He also fixes up and resells distressed and foreclosed houses.

Eighty-five percent of Berkowitz’s net worth and income derives from real estate, he estimates. Social Security and an investment in a research company make up the rest of his income. “I gave up on stocks, bonds, mutual funds, and other investments that are managed by others a long time ago,” he says. “I found out that the best manager of my money is me.”


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