Investing on a Dime

Posted by T | 8:52 PM | 0 comments »

I don't read a newspaper each day. Instead, I read my news online. By doing this, I save about 50 cents a day, and a tree. While reading article today on MSN.com, I came across a very interesting article called "Getting Rich on a $20,000 Salary".

This headline caught my eye because I make more than $20,000 a year, and I have been a bit remiss about investing my money. Right now, my investment cash is sitting in a simple rollover IRA.

Enter Earl Crawley. According to MSN.com, the 69-year-old parking lot attendant is now worth a cool $500,000, and he makes a salary of, yep, $20,000 a year. How did he do it?

Luckily, time was on Earl's side. He started investing whatever money he could scrape together, purchased stock in good, solid companies like IBM, and let compound interest do the rest. It took 44 years, but he now has half a million dollars. Earl could deposit his funds into a savings account which pays 4 percent a year, withdraw 4 percent a year, and continue to live on $20,000 a year if he chose to do so. He would also have Social Security to help supplement his income, so he could actually live on more cash than he currently does while working.

Earl has some good lessons to teach all of us:

1. Get started early. If you can't start early, start NOW.
2. Buy stock in good companies which pay dividends. These are companies which have been around a long time, and should be around for a long time to come. If you use a company's products every day and they are popular, that would be a good stock to hold.
3. You can get started for practically any amount of money. Some mutual funds will let you start investing for as little as $25.
4. Long term investments are just that...long term. Don't spend your long term savings on living expenses, vacations, cars, etc. This is money to help you live comfortably when you stop working.

As Earl has proved, you can live a frugal life AND still invest your money.

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