Have you wondered how people became wealthy?

Author: Almost Anyone Can Be A Millionaire

New Britain Native Writes Formula Book

February 28, 2000|By BILL LEUKHARDT; Courant Staff Writer

NEW BRITAIN — Growing up here in a middle-class family, Ed Dzwonkowski sometimes wondered how people became wealthy.

He had a paper route after school, but that wasn't a road to riches.

It has been decades since those news carrier days, and Dzwonkowski, 42, and a certified financial planner living in California, now thinks he has figured out how almost anyone can become a millionaire.

The key is working hard and consistently investing the weekly paycheck in assets that will appreciate in value.

``It does not happen overnight. You have to be consistent. In the old days, pensions and Social Security might have provided enough. Now, people usually don't stay in one company for life, and they may want to retire early or be forced to retire early because of illness or other reasons,'' Dzwonkowski said. ``So it's prudent to plan for yourself.''

He has put it all into a book titled ``How You Can Become a Millionaire,'' which he had printed himself and is selling through distributors across the nation. It costs $19.95 and is published by Great Spirit Publishing Co. in Huntington Beach, Calif. Dzwonkowski is Great Spirit Publishing.

According to Dzwonkowski, if a person puts $264 a month, every month for 35 years, into investments that yield 10 percent interest, that person will have $1 million at the end of 35 years.

``And if you fall short of your goal, you'll still have some sizable amount that you wouldn't have had if you hadn't begun investing,'' Dzwonkowski said.

Asked if he is a millionaire yet, Dzwonkowski gave what he called his standard answer: ``Not yet, but I'm closer today than I was yesterday. I do follow my own advice.''

The book is in its second printing. The first 1,000 copies were sold to people as far away as New Zealand. Those requests came via the Internet, he said.

Dzwonkowski's father, Edward ``Butch'' Dzwonkowski, is New Britain's registrar of voters. He says he's proud of his son.

``He gets on my case about investing. But I tell him I'm too old,'' the elder Dzwonkowski said.

His son has two words: Anne Scheiber.

Scheiber, who died in 1995 at the age of 101, was a low-paid clerk with the Internal Revenue Service who decided at age 50 to start investing, using $5,000 she had squirreled away.

She invested every month, and by the time she died, her investments had grown to $20 million, generating income of $62,000 a month. She left her money to Yeshiva University in New York.

``Anne Scheiber did what I advocate. Consistent savings and investment over time. Look what it did for her,'' the author said.

http://articles.courant.com/2000-02-28/news/0002280183_1_investing-anne-scheiber-millionaire

THE ESSAYS OF WARREN BUFFETT - Buffett Powerful Philosophy for Investing

Published:    March 28, 2001

THE ESSAYS OF WARREN BUFFETT by, Joseph Dancy - LSGI Technology Venture Fund
		Living quiet, unpretentious lives Mr. and Mrs. Othmer - a professor of chemical engineering and a former teacher - died a few years ago in their nineties. When the Othmer's died, friends were shocked to learn that their estate was worth $800 million. The Othmer story is not unique. Anne Scheiber never married and worked for the government, never making more than $4,000 a year. She lived a quiet, simple life. When she died in 1995, her estate was worth $22 million. Likewise, Jacob Leeder lived in a modest home and drove a 1984 Oldsmobile station wagon. Occasionally he would go out to eat - usually at a cheap, cafeteria- style restaurant. It wasn't until Leeder died last year that friends discovered that he was worth $36 million. How did these people get so rich? Like many long term investors, they put their money into well managed undervalued companies and left it there. The Othmers had an additional benefit: in the early 1960s they each invested $25,000 with Warren Buffett. Today Mrs. Othmer's shares are worth $578 million; her husband's, sold on his death when the price was lower, were worth $210 million. Even without Mr. Buffett, if they had put their funds into the broader market they still would have done well - having an estate with a current value of between $50 million and $100 million. The Essays of Warren Buffett The investment strategies utilized by Warren Buffett to attain the Othmer's gains were recently published by a law professor at Cardozo University. Entitled "The Essays of Warren Buffett: Lessons for Corporate America" it is a compilation of Buffett's annual reports and other communications, and is a good overview for those not familiar with his investment philosophy (available by sending $17.45 to Prof. Lawrence Cunningham, Cardozo University, 55 Fifth Ave., New York, NY 10003). Some of Buffett's more interesting investment philosophies are as follows: 1. Buy a Good "Business Boat" Buffett points out the importance of choosing a company situated in a growing and profitable industry. He identifies his largest investment mistake - buying the company his firm was named after (Berkshire Hathaway) - not because the company was flawed, but because the industry it was in (textiles) was so unattractive. Buffett recalls how the textile industry provided very meager returns for Berkshire. No matter how well managed the company was it would always have subnormal returns. The textile industry was a commodity business, competitors had facilities located overseas that were low cost producers, and substantial excess capacity existed worldwide. Buffett claims he would not close down a business that is important to a community just to improve the corporate rate of return, but if it appeared that losses would be unending no other course of action makes rational economic sense. Buffett notes "a good managerial record (measured by economic returns) is far more a function of what business boat you get into than it is of how effectively you row . . . Should you find yourself in a chronically-leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks." 2. Compound Returns by Deferring Taxes One reason that the Othmer's were able to accumulate $800 million in assets was because their investment in Berkshire stock compounded and their capital gains taxes were never realized. "Tax-paying investors will realize a far, far greater sum from a single investment that compounds internally at a given rate than from a succession of investments compounding at the same rate. But I suspect many Berkshire shareholders figured that out long ago" according to Buffett. Illustrating the point he notes "imagine that Berkshire had only $1, which we put in a security that doubled by year end and was then sold. Imagine further that we used the after-tax proceeds to repeat this process in each of the next 19 years, scoring a double each time. At the end of the 20 years . . . we would be left with $25,250. Not bad. If, however, we made a single fantastic investment that itself doubled 20 times in 20 years . . . we would be left with about $692,000." Buffett's calculations use a capital gains tax rate of 34% - much higher than today's, but the point is well taken. Deferred taxes allow an investment to compound, increasing the return on investment. 3. Concentration of Investments Professor Cunningham notes that "contrary to modern finance theory, Buffett's investment knitting does not prescribe diversification. It may even call for concentration . . . a strategy of financial and mental concentration may reduce risk by raising both the intensity of an investor's thinking about a business and the comfort level he must have with its fundamental characteristics before buying it." Other articles have noted the tendency of Buffett to concentrate his investments, and claim that this is part of his success. If nothing else, concentration allows an investor to follow a company much more closely - which allows them to better judge when a stock is undervalued. 4. Good Business Judgment & Mr. Market Buffett subscribes to the theory that the market is not always efficient, and that at certain times companies will be grossly undervalued or overvalued. The market allows an astute investor to buy positions in companies well below intrinsic values. In the long term, such value will be recognized. "An investor will succeed by coupling good business judgment with an ability to insulate his thoughts and behavior from the super-contagious emotions that swirl about the marketplace . . . The speed at which a business's success is recognized is not that important as long as the company's intrinsic value is increasing at a satisfactory rate - in fact, delayed recognition can be an advantage: It may give us the chance to buy more of a good thing at a bargain price." 5. Small Base From Which to Grow Due to the size of the funds Berkshire now manages, Buffett recognizes that the return he will obtain from his investments will be lower than when he was managing much smaller sums. Using analogies to the growth of bacteria, he notes that growth from a small base can continue at a much faster pace for much longer than from a large base. The larger sums now being managed limit the size of companies Berkshire can invest in - using a concentrated investment approach meaningful investments in small and micro-cap companies cannot be made from a practical standpoint. Summary Those who are familiar with Buffett's investing style, or who have read some of the books on him published recently or the Berkshire annual reports, will find little new here. Even so, it is always interesting to read the thoughts and investment strategies of one of the world's most successful investors. http://www.marketocracy.com/cgi-bin/WebObjects/Portfolio.woa/wa/ArticleViewPage?source=IdKnEfOoDlLlKcDcMaKiAbLb

Sharemarket crash survival guide

By Bruce Jackson - Tuesday, November 22nd, 2011

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Shares are being trashed, again. The temptation is to sell everything and run for the hills. Instead, take a chill pill and consider The Motley Fool’s patented sharemarket survival guide.

Down down, shares are going down.

After weeks of worrying about European sovereign debt woes, focus has again turned back to the U.S. and its own debt crisis.

In the U.S, the S&P 500 has posted its worst losing streak in 2 months.

Over the last 3 weeks, our own S&P/ASX 200 index has fallen almost 7 per cent in the last 3 weeks. Some shares have fared even worse…

Company	% Share Price Fall Oct 28 2011 to Nov 21 2011
Australia & New Zealand Banking Group(ASX:ANZ)	(10.6)
National Australia Bank (ASX:NAB)	(10.7)
Iluka Resources Ltd. (ASX:ILU)	(11.3)
Incitec Pivot Limited (ASX:IPL)	(12.5)
Lend Lease Group (ASX:LLC)	(11.2)
Mesoblast Limited (ASX:MSB)	(14.1)
David Jones Ltd. (ASX:DJS)	(13.1)
BlueScope Steel (ASX:BSL)	(29.5)
White Energy (ASX:WEC)	(72.4)

With the exception of White Energy, these are all big companies. It has been a tough time for investors.

So what are the keys to surviving market downturns? Here are some suggestions:

1. Don’t get absorbed in despair and panic. Ignore the violent emotional swings, and instead simply maintain a degree of detachment with regard to the whole business.

2. Be a regular saver and investor. That way, a market downturn becomes nothing more than a buying opportunity.

3. Reflect that Anne Scheiber, the U.S. lawyer who invested $5,000 in 1944 and died in the mid-1990s worth over $20 million, never sold a share and invested only in common, easily understandable companies. To her, we must presume, market fluctuations were an irrelevancy.

4. Finally, stop buying the newspapers, don’t watch the TV and go away on holiday. In short, switch off the market. Life’s too short for all that hullabaloo.

(As an aside, if you are worried about the market crash, you might want to first check out our new free report, Read This Before The Market Crashes. It could save you hours of heartache, and thousands of dollars. Click here to request your report now, whilst it’s still free and available.)

As our Investment Analyst Dean Morel said just a couple of weeks ago…

“When bearish volatility, caused by emotions and a lack of reason, leads humans to herd, sharemarkets become irrational and oversold. That irrationality allows investors who are able to control their emotions and act in a calm, balanced manner, to take advantage of the many opportunities the market throws up.

There is no need to make big decisions. You don’t  need to be fully invested in, or totally out of the market. Gradually building positions in the best companies while maintaining a cash cushion will make investing easier and less stressful.”

Stock market falls are like the seasons of the year. They are a natural part of the investment landscape, they are normal and can even be very healthy.

This latest crisis, like all crises before, will pass. And those that survive will prosper.

http://www.fool.com.au/2011/11/investing/sharemarket-crash-survival-guide/

Stories of frugal females who amass their fortunes through hardwork, consistent savings and wise investing.

Wednesday, February 15, 2006

Frugal Females Found

Occasionally we hear amazing stories of frugal females who over a lifetime of living beneath their means and saving and investing have managed to amass fortunes. Generally because these women do not have immediate family they bequeath this wealth to a private university, non-profit organization, or even to our government to help pay down our national debt. Margaret Elizabeth Taylor, a widow since 1977, died at age 98 (Nov. 2005) and having no surviving siblings or children "bequeathed her $1.1 million estate to the federal government and requested that it be used to help pay down the $8.1 trillion national debt."Woman Leaves Fortune to Pay Nation's Debt Anna Patocka, who worked as a cook, died at age 95 (July 2005), and left "$1 million to local organizations". "She didn't make a million by inheriting it," friend Helen Linhart said. "She saved it." GRAFTON, N.D.: Woman leaves behind $1 million Anne Scheiber, who worked for the IRS as an auditor, died at age 101 (1995), and left $22 million to "Yeshiva University, with the stipulation that the money be used to establish a scholarship and loan fund for deserving female students at YU's sister institution of Stern College" The Butterfly Effect (Anne Scheiber) The fact that these women had so much wealth to bequeath surprised the folks who knew them. Each was a secret millionaire. The money was accumulated by hard work, consistent savings, and wise investing.  Anne Scheiber made quite the news splash when her bequest was made public in 1996. I remember the article in TIME magazine and the news stories which made much of her stagnant career at the Internal Revenue Service. She was someone who had a law degree and was obviously smart, but because of her gender she spent her entire IRS career in a junior position and never received a promotion nor much of a raise. This prompted her to vow never to enrich the IRS if she could help it. To keep that vow she never sold the stocks she purchased and each stock had the dividends reinvested. This meant her money just grew and grew since only sales would trigger a tax payment. While she was a wise investor, she was also an extremely frugal woman. She saved approximately 80% of her take home pay when working. She lived in a rent controlled apartment, almost never purchased new clothes, and for entertainment attended annual shareholder meetings of corporations she invested in and after using her auditing background to grill the executives would fill her handbag with the free food at the buffet and live off that for days. I find reading these stories inspiring. There is something about knowing that these women had control of themselves and their wealth and did with it as they saw fit. While some may say "but how deprived they must have been, wearing the same clothes and eating left-over stale food". I really don't see it that way. They obviously felt that clothes were not important. You could almost look at it as they were wearing a self-made uniform day in and day out. Nothing so wrong with that. I enjoy food too much to eat stale stuff, but who knows how much I will enjoy food when I am 90? I think that is part of the problem, these women lived so long that most of the folks who did know them and spoke of them reminisced of the 80, 90, or 100 year old woman. What were these females like in their 20's, 30's, or 40's? What personal experiences kept them on their frugal paths? I wish we found these ladies while they were still alive and could tell us their full stories... http://www.bostongalsopenwallet.com/2006/02/frugal-females-found.html

Stock Selling Strategies: The Buy and Hold Strategy

Stock Selling Strategies
The Buy and Hold Strategy

The selling strategy of what is commonly called the buy and hold approach to investing can be expressed in one word - don't! And the arguments in its favour are strong ones. For one, it has a solid record of success. Such famous names as Warren Buffett and John Templeton made their fortunes with it.

Or consider the remarkable case of Anne Scheiber. She represents, not only the superb returns that can be enjoyed from a skillful buy and hold strategy, but also the pluck to jump back in the game after losing everything.

In 1933 and 1934, at the height of the depression, 38 year old Anne invested most of her life savings in the stock market. She let her broker brother make the picks and they were good ones. Unfortunately, his company went bankrupt and she lost everything. But Anne did not give up.

On her modest salary as an auditor for the Internal Revenue Service (just over $3000 a year), she managed to save another $5000 over the next ten years. In 1944 she invested in the stock market again. When she died in January 1995 at the age of 101, that modest investment had grown to $20 million. That's not a misprint. $20 million! That represents an annual compounded rate of return of 17.5%, ranking her among the top investors of all time.

Her secret? Miss Scheiber invested in stocks of companies that she knew and understood. Companies whose products she used. She loved the movies. So she invested in Loew's, Columbia, Paramount and Capital Cities Broadcasting. She drank Coke and Pepsi and bought shares in both. She invested in the companies that made medications she took - Schering Plough and Bristol Myers Squibb. And so on. And she hung on to them through thick and thin for over forty years. Through the bear market of 1973-1974. Through the crash of 1987.

Miss Scheiber left virtually the entire fortune to New York's Yeshiva University. By the time the estate was settled in December of 1995, it had grown to $22 million. You'll find links to her story and to investing tips based on her approach after this article.

The Buy and Hold approach to investing focuses on the buying, not the selling. The aim is to buy stock in companies that are solid and growing with long term potential. It focuses on the underlying value of the stock.

The approach is often considered synonymous with value investing. It ignores the stock market, the general economic climate, and prevailing sentiment.

Warren Buffett, considered by many to be the greatest investor of all time, has said that he pays no attention to the stock market, and in fact, would not mind if the market shut down for a few years. He buys stock in a company as if he was buying the entire company. It's the value of the company that interests him, not the value assigned to it by the market. He wants companies that generate consistently growing profits.

Value investors tend to focus on buying undervalued stocks. And value investing is not completely averse to selling a stock, though the preference is to hold. As the Templeton Fund puts at their website, "Templeton buys stocks with the intent to hold them until they reach their "fair" value-- typically five years."

Buy and hold investors do sell when the fundamentals of a company change or when a stock becomes so grossly over-valued by the market that it would be foolish not to take profits. But in general, short term market fluctuations are ignored.

Downside to Buy and Hold

Of course, while buy and hold investing has definite advantages, there is a downside.

There have been major bear markets in the past and such markets tend to drag down all stocks, even those of good companies. If such risks can be minimized, wouldn't it be worth it?

The question is, can it? In the June 19, 2000 issue of the Hulbert Financial Digest, Mark Hulbert points out that there are newsletters who have been able to minimize investor losses during severe market corrections. Five in particular stand out. These five market timers were able to keep their readers' losses to one or two percent during each of the last five major market corrections since August 1987 (while the Wilshire 5000 averaged a 15% loss and the NASDAQ Composite lost 20%).

But...and here's the rub - those five newsletters failed to capture the tremendous gains made during the up cycles. Their average returns for the entire period from August 31, 1987 to May 31, 2000 ranged from 2.3% to 7.2% while the Wilshire averaged 14.3% and the NASDAQ 17.1%. Safety comes at a serious price!

In fact, Buy and Holders disparage the notion of market timing. It is folly, they say. And a pamphlet from the Templeton Fund in 1997 demonstrates that better than anything. Follow the link below for a summary.

The Folly of Market Timing

Summary of Advantages and Disadvantages
of the Buy and Hold Strategy

Advantages	Disadvantages
Don't have to worry about the market.	Doesn't protect against bear markets and corrections.
Don't have to worry about the economy.	Stocks should be extensively researched and carefully chosen.
Don't have to pay attention to short term fluctuations.	Long term strategy.
Easy to manage portfolio.	No quick short term profits.
Ideally, don't have to sell at all.
Notable success stories and history.

http://breakoutreport.com/investingcanada/library/weekly/2000a/aa062900.htm