By Nicole Lewis
Albert Sweets, 36, got his first real lesson in financial planning when he joined the military at age 17. He was making $20,000 a year and his first paycheck taught him a lot about real earned income.
“The government said I was making $20,000. However, my take-home pay was in the neighborhood of $12,000,” Sweets says. “It was a reality check because you earned so little and yet the people in the military put their lives on the line. It motivated me to make a move.”
By the time Sweets completed his three-year tour with the Navy in 1988, the military operations specialist was earning $22,000. He opted to take advantage of the educational assistance programs provided by the military and attended Morgan State University, where he studied electrical engineering. Earning so little in the military made him cost conscious, which evolved into a passion for saving moneyâ€“starting with saving on college costs.
“Through government programs, I received about $8,000, and I got another $12,000 from corporate America,” says Sweets. “In the five years I was in school, I only had to take out a $1,500 loan.”
Like so many young men, Sweets had almost no investments to speak of before the age of 25. Even though he was keen on saving, he only had an IRA his mother insisted he open. He instead focused on education and a career as the way to a lasting fortune. With his education and military service behind him, Sweets landed a job as an engineer at IBM in 1994, and for the first time began to practice DOFE Principle No. 2: To save and invest 10% to 15% of my after-tax income.
“When I started with IBM, I immediately got involved in the company’s employee stock purchasing program, where you can purchase company stock at a low price. I committed 10% of my salary toward that program, and I also contributed 15% of my salary to a 401(k),” says Sweets.
In 2002, Sweets landed a job as a project manager with electronics contract manufacturer Sanmina-SCI, and he had to decide what to do with his 401(k) at IBM. Since he had become so enamored with saving, he dedicated himself to DOFE Principle No. 3: to commit to a program of retirement planning and investing, and transferred his 401(k) into an IRA account, which gave him a wider variety of investment options to choose from.
“I have more control over an independent IRA,” says Sweets. “With the 401(k), you have only a certain number of choices. But once I opened an independent IRA, I could play options, invest in individual companies, mutual funds, or whatever I choose.” He faithfully contributes between $1,000 and $3,000 annually to the account.
Sweets also duplicated the approach he took when he joined IBM, and began placing 10% of his salary into Sanmina’s employee stock purchase program. Thanks to his diligence, his retirement portfolio is flourishing. The Sanmina shares he bought starting at $3 each were priced at $11 last November, making them worth