Neil McCarthy started investing in the stock market when he was 34, in the depths of the 1970s bear market. "It got scary for a while," he recalls, "but my philosophy was to invest a little bit and let it grow. When stocks went down, I would buy more."
McCarthy contributed the maximum to both his IRA and his 401(k) at Union Carbide, where he started as a research chemist and got a boost from a 100% employer match. He and his wife, Maureen, who worked as a teacher for several years, continued to save for retirement, even while they were paying for their two sons' college educations.
Their big payoff came with the 1990s bull market. "Everything kept adding up and compounding, and then it doubled in three or four years," says Neil. "It was $500,000, and suddenly it was $1 million."
The McCarthys invested mostly in stock funds but avoided technology companies. "People were going wild with Internet stocks, but it didn't make sense to me," says Neil, who did the financial analysis when he worked in marketing for Union Carbide. "When I saw P/E ratios of 200 to 300, I thought it was absolute nonsense."
Their practical investing style preserved their millionaire status when the market crashed. They also benefited from a bit of fortuitous timing when Neil, who spent the last 14 years of his career working for BP Amoco, retired in 2000. He took his retirement payout as a lump sum and invested part of the money in an immediate annuity just before interest rates started to fall, getting a bigger payout than if he had chosen the company's pension annuity.
Neil, 65, and Maureen, 61, have $1.3 million in savings, which they haven't had to touch. Counting the annuity and Neil's pension from his 20 years with Union Carbide, they have a net worth of about $2.1 million. And that doesn't include their house in Roswell, Ga., valued at about $525,000, which is almost paid off.
The McCarthys are classic stock-market millionaires, reaping the benefit of steady investing through bull and bear markets. But one piece of simple advice made all the difference: "If you wait to save out of what's leftover from your salary, it's not going to happen. Pay yourself first."
McCarthy contributed the maximum to both his IRA and his 401(k) at Union Carbide, where he started as a research chemist and got a boost from a 100% employer match. He and his wife, Maureen, who worked as a teacher for several years, continued to save for retirement, even while they were paying for their two sons' college educations.
Their big payoff came with the 1990s bull market. "Everything kept adding up and compounding, and then it doubled in three or four years," says Neil. "It was $500,000, and suddenly it was $1 million."
The McCarthys invested mostly in stock funds but avoided technology companies. "People were going wild with Internet stocks, but it didn't make sense to me," says Neil, who did the financial analysis when he worked in marketing for Union Carbide. "When I saw P/E ratios of 200 to 300, I thought it was absolute nonsense."
Their practical investing style preserved their millionaire status when the market crashed. They also benefited from a bit of fortuitous timing when Neil, who spent the last 14 years of his career working for BP Amoco, retired in 2000. He took his retirement payout as a lump sum and invested part of the money in an immediate annuity just before interest rates started to fall, getting a bigger payout than if he had chosen the company's pension annuity.
Neil, 65, and Maureen, 61, have $1.3 million in savings, which they haven't had to touch. Counting the annuity and Neil's pension from his 20 years with Union Carbide, they have a net worth of about $2.1 million. And that doesn't include their house in Roswell, Ga., valued at about $525,000, which is almost paid off.
The McCarthys are classic stock-market millionaires, reaping the benefit of steady investing through bull and bear markets. But one piece of simple advice made all the difference: "If you wait to save out of what's leftover from your salary, it's not going to happen. Pay yourself first."
The following tips are practical, sensible, and honest ways to make money:
1. A unique business idea: In this age of technological advancement, can you come up with a unique idea to create an app? If it is useful and popular, Google or Facebook will be willing to pay you millions to purchase your innovation and make you filthy rich. Do you have a wonderful business plan that can attract a lot of customers? Get an idea to make a fortune.
2. Marketable skills: According to an article, the Best (and worst) jobs for 2014, CareerCast is out with their annual ranking of the 10 best and 10 worst jobs for 2014, and let's just say that math and science guys everywhere are about to high-five. Nine out of 10 of the best jobs fell into the STEM career category (science, technology, engineering, and math), with the "numbers guys," in particular, locking in three of the top four spots. Acquiring relevant technical skills so that you are an expert in your chosen field of endeavor. In the business world, your technical knowledge is highly sought after by employers. As long as you do a good job and continue to update your skills, you will be in demand.
3. Pay yourself first: You don’t spend all of what you have earned if you want to grow your wealth. You have to save some so that you can invest later when the amount is substantial.
4. Invest: The amount you invest, the rate of return, and how long you hold your investment will determine the size of your wealth. Like doing business there is an element of risk involved but it is better than keeping your money in the bank and allowing inflation to erode your purchasing power and making you poorer in the long run.
5. Free from debt: Living within your means is the only way to stay away from getting into debt. When you are in debt you have to pay interest for the outstanding amount. More interest will be added as long as the debt is not cleared.
6. Learn: Read books, go online to read the latest business news. Equip yourself with financial knowledge to make wise money decisions.
7. Reinvest for growth: Earn more by ploughing back what you have made and grow your wealth.
8. Property: Land is a scarce resource, so property investment makes sense for the long term. Choose the location wisely. Often your home is your first investment.
9. Shares: Invest in companies with a solid performance in terms of sustainable growth and earnings, healthy cash flow, and consistent dividend payout. It is a reliable source of passive income.
10. Do not believe in get-rich-quick schemes: Do not be greedy. There is no such thing as getting a very high return within a very short period of time.
What are your ideas about making money?
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