HALF A MILLIONAIRE

The current economy pushes the poor back while for the rich it is a great chance to get richer. The poor man has to worry about food, rent and healthcare cost while the rich sits silently and waits for the right moment to snatch the first opportunity of making a profit. In America, that is how the game is played. The poor man can: 1) complain about his fate, or 2) find a way to become rich. My choice is obvious.

When one is at the bottom of society, education is the only lifeline. My strategy is to study something that I enjoy and at the same time make enough money to support my life. No one wants to work for someone else, but sometimes one needs to take this necessary step to strengthen one’s financial position before venturing entrepreneurship. In other words, I must, first, build myself to become a cash machine because no one will hand me a house or money. I believe that investing in oneself is the best investment because the rate of return is infinite. Besides the money that I make, education has expanded my knowledge of life. I am able to understand its value and beauty.

Although we have some extra money left over after having paid our bills every month, saving it will take decades to reach half-a-million. If I am to put $1000 per month in a box, I will win this game in about 42 years. If I put the same monthly amount in a saving account with an initial amount of one dollar that offers a 2% annual compounded interest rate, it will take 30 years to reach $486,818 (based on simple savings calculator at http://www.bankrate.com). If I invest $1000 per month in the stock market and ”assume” a 5% rate of return, I will earn approximately $400,000 in 20 years (initial amount: $1). I don’t see myself opening a business in the near future. Therefore, I am going to invest in the stock market despite its volatility.

My plan is to invest in dividend-paying stocks. I will focus on consumer staples, healthcare and energy sectors because I believe that people will continue to use gasoline, drink, smoke, eat, brush their teeth and take medications regardless of what condition the economy is in. Therefore, I believe that these three sectors are good for my long-term investing style. I can be a short-term investor at anytime. However, to achieve my objective, I want to put my money in the game as soon as possible because I have to rely on the power of compounding. These boring, dividend-paying stocks will become my cash machines. Currently, I own 1192 shares, which will produce about $1000 per year in dividends (see below table).

Real estate is good investment, but it requires much more energy input. It can generate a lot of positive cash flow if one knows how to do it. At the moment, I am not ready to undertake the risk of real estate investment although I have a rental property, which I use as learning experience. However, in the future, it is a good place to build new cash machines that will propel me closer to my financial goal.

Death is inevitable. I choose to be rich, not because of the money, but to show myself that I have the courage to play the game. You have the right to choose to stay poor for whatever reasons. As a reminder, this financial game is just a game within the game.