So you want to be a millionaire? Of course you do. WHO doesn’t? But let’s face it, the chance of Regis Philbin handing you a check for answering some mundane questions or Ed McMahon showing up at your door is one in a million.
If you want to become a millionaire, you have to do it the old-fashioned way-you have to earn it. We aren’t talking about how much money you make; the ability to accumulate wealth has little to do with the size of your paycheck. Whether you bring home $20,000 or $200,000 a year, only you can determine if you can sock away enough money to last a lifetime.
The good news is that the younger you are, the better your chances. Twenty-somethings take note: employing the first principle of Black Enterprise’s Declaration of Financial Empowerment-to save and invest 10% to 15% of after-tax income-and letting the magic of compounding work for you can lay the foundation for serious wealth down the road.
That is exactly what Lorenzo Richardson has in mind. The 29-year-old accountant with Panasonic Corp. in Secaucus, New Jersey, attributes his stellar savings record-he has very little student-loan debt, adds an additional amount to his monthly mortgage payment and is socking away money for an early retirement-to the lessons learned from growing up on welfare. “We did what we had to do to make ends meet, like clip coupons, walk an extra mile or two to the store to get the best bargains,” says Richardson, who is the oldest of a single-parent family of six.
At 17 he got his first part-time job at a consumer catalog showroom, where he made $3.75 an hour. With financial aid covering the majority of his college costs at St. Peters College, Jersey City, New Jersey, between 1988 and 1993 he accumulated $10,000 from part-time jobs, which he used as a down payment on a home in his native Jersey City. Of his current $38,000 salary from Panasonic, he contributes the maximum allowed-15%-to the company’s 401(k) plan. He is also taking advantage of Panasonic’s tuition reimbursement program to work toward an M.B.A. at St. Peters.
To help turn his dream of retiring early and running his own business into a reality, about a year ago Richardson joined RDS Investment Club. He began by contributing $25 a month, but increased it to $100 starting this year. As of November 1999, the club members enjoyed an annual compound return of 42% on their investments. On his own, Richardson is looking to buy shares in GE, Home Depot and Wal-Mart via those companies’ dividend reinvestment plans (DRIPs).
Next on Richardson’s agenda is getting his mother and younger brothers and sister into the habit of saving and investing. In fact, the family has agreed to give each other shares of stock instead of gifts for birthdays and Christmas.
More and more regular folks are proving that anyone, young or old, can accumulate wealth. In Simple Wisdom for Rich Living (Longstreet Press, $9.95), Oseola McCarty tells how she amassed