8 steps to 7 figures
- Book Title: Eight Steps to Seven Figures - The investment strategies of everyday - millionaires and how you can become wealthy too
- Author: Charles Carlson
- Year written/published: 2000
- Some extracts:
8 steps are:
- Start investing – NOW
- Establish a goal – it doesn’t matter what it is as long as it matters to you
- Buy only stocks and stock mutual funds. Forget about asset allocation
- Swing for singles. You’ll strike out fewer times and hot some runs in the process
- Invest every month no matter how small the investment
- Buy and hold… and hold… and hold.. and hold
- Take what uncle Sam gives you – tax efficient policies… take them!
- Limit shocks to you finances – e.g. for shocks are divorce, too many children, changing jobs
Some mistakes…
- failing to start early
- Selling too soon
- Selling too late
- Blindly following the advice of friends, coworkers, and especially brokers
- Market timing
- ‘micro’ timing stock purchases
- speculating in future, options and speculative stocks
- reacting to news
- ignoring the ‘little thing’ of investing – tax + brokerage fees
Number of…
- return on Equity
- Net profit margins
- Per-share earnings growth
- Revenue Growth
- Debt levels
- market capitalisation
- company ownership
Selecting mutual finds…
- buy only no-load funds - no sales fees
- don’t buy a fund whose annual expense ratio is greater than 1.4%
- Buy funds whose turnover is less than 100% and preferably less than 50%
- avoid fast growing funds that invest in small company stocks
- focus on funds that have at least 3 year track record with the same fund manager
Dollar cost averaging
an easy way to implement diversification in an investment program is by using this method. DCA takes emotion out of the investment process and requires you to make regular contributions to your investments, regardless of market levels