No. 433


Have you noticed, "Birds of a feather tend to flock together?" When I go to an all star basketball or football game, I see coaches there who retired 10 to 15 years ago. They want to see the game but more than that, they want to see those fellow coaches they have known over the years. When I go to the country club to play golf as the guest of a friend, I see upscale people there who are playing golf and having a great time. The same is true for people involved in most any other activity outside of work that you can name. We just naturally gravitate to those people who have the same interests, values and social status. You will find that people who have wealth also stick together. There is almost an unwritten code that says, "You can be in my club if your balance sheet will stand up to scrutiny."Ê

When it comes to the subject of money, one of the hardest things I have ever tried to do is convince my kids, especially my son, that it's important to save and invest their money. They seem to think they will live forever and there will always be a paycheck waiting for them to come by and pick up. None of my children are destitute, but they would all be better off and have a much brighter financial future, if I could just get them to understand the principle of compound interest, regular savings and investing a good portion of their income. Because of this attitude, they spend most of their leisure time with people just like them, which is another way of saying, "Birds of a feather flock together."

Now please understand, I am not putting my own children down because I love them more than anything, but being older, and hopefully wiser, I know what is waiting for them down the road when they grow old and can no longer stand up to the physical demands of a job. The reason I am so concerned is because they are still relatively young and still have time to begin a savings and investment program that will insure a bright financial future. It's nice to have a little money saved for your golden years and you can take trips, go out to eat, buy the things you want and not have to worry about the cost of prescription drugs.

What brought this to mind is several good articles a reader from Mississippi, who is in the life insurance business, sent me the other day. One of these articles begins with a question, "Where will you be?" According to an1985 study by the U.S. Department of Health, Education and Welfare, for every 100 people starting their careers, the following situation exists at age 65É. 29 are dead, 13 have annual incomes under $4400, 55 have annual incomes between $4400 and $29,000 (the median income for this group is $6800), and 3 have annual incomes over $29,000 which means they are financially successful. These figures were compiled in 1985 but when you adjust them for inflation, the real spending power wouldn't be much different today.

Another one of those articles is titled "THE TEN COMMANDMENTS OF WEALTH" and while only ten sentences long, it is powerful. In fact, several books could and have been written on each one. I can promise you that this is solid information and regardless of your age, I hope you will take time to ponder and think about each of these Ten Commandments Of Wealth. You might even take a pen and check them off one by one as you read and think about them. 1. Have a financial life plan. 2. Live on less than you earn and invest the rest. 3. Test each investment with the acronym S-L-Y that stands for Safety, Liquidity and Yield. 4. Learn to invest and manage your own money. 5. Learn the tax laws. 6. Recognize that you are being defrauded by inflation. 7. Keep a rough budget and know your net worth. 8. Recognize the magic of compound interest (sound familiar?) 9. Always avoid a capital loss. 10.You will achieve as much wealth as you believe you can.

When it comes to investing your money, here are some suggestions. 1. Diversify your investments. Choosing a variety of investments is an effective way to reduce risks and pursue more consistent returns. 2. Focus on Positive Long-Term Trends.Ê If you won't be using your money right away, you can look beyond day-to-day changes and concentrate on long-term trends. 3. Move your money wisely. If you want to transfer money among funds, do it gradually over time. 4. Take advantage of professional management. This is where you need to get the advice of someone you know who is a successful investor. If you don't already have a great financial future, I hope you will get started soon. Remember, it's not how much you earn; it's how much you save over time that will make the difference. (Jim Davidson is a motivational speaker and syndicated columnist. You may contact him at 2 Bentley Drive, Conway, AR 72034.)