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This is no longer available for free, but you can order a copy of The Wealthy Barber Returns, from Amazon today! David Chilton is an. The Wealthy Barber by David Barr Chilton, , Prima Pub. edition, in English. The Wealthy Barber Returns. The Wealthy Barber - Everyone's Commonsense Guide to Becoming Financially Independent. In this new and updated edition of one of the biggest-selling financial-planning books ever, David Chilton simplifies the complex puzzles of personal finance and helps.

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From now until December 31, , download your free eBook copy of the popular personal finance book, The Wealthy Barber Returns. We love links to digital freebies. Free pointless fun stuff, free iOS and Android apps, free games, music, video, eBooks, software, and anything. off your first purchase. The Wealthy Barber Returns is a very unusual financial- planni. The Wealthy Renter - How to Choose Housing That Will Make You Rich ebook by Alex A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing (12th Edition). Burton G. Worry-Free Money. Shannon.

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The wealthy barber everyone's common-sense guide to becoming financially independent by David Barr Chilton 25 Want to read 3 Currently reading Published by Prima Pub. Written in English. Classifications Dewey Decimal Class C54 The Physical Object Pagination p.

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Check nearby libraries with: WorldCat Library. Buy this book Amazon. Share this book Facebook. History Created April 1, 9 revisions Download catalog record: Wikipedia citation Close. May 10, Edited by ImportBot. August 12, September 30, April 1, We had more than a thousand dollars a month to play with and almost twenty-two thousand dollars sitting in the bank. I was ten years from retirement, and both your mother and I figured we'd better seek professional help. I knew that with my pension plan, my retirement looked pretty good.

But I also knew that if I handled our newfound nest egg and our monthly surplus funds well, your mother and I could be looking at a vacation home, a boat, some trips, or maybe even all of these. Both of us had always wanted a place on the lake and this was our chance.

Something intelligent, I hope, considering that someday all this could be mine. Don't you think it's only fair to leave her half? A Surprising Referral "I got the best haircut of my life," he deadpanned. I really" "I am serious. You know James. He's always there on Saturdays with Clyde and Jimmy. I told him I was in the market for some financial planning advice and asked him if he could recommend anyone.

Even though he had been out of the field for about ten years, I figured he would still know someone competent. C'mon," I said, disbelieving. Over the next several months, as he cut my hair, Roy taught me the basics of financial planning.

And you'll be pleased to hear that right now my finances are in great shape, and they're looking better all the time.

I am pleased to hear that. But how the heck does a barber become a financial planning expert? As you know, Roy and I were high school classmates. He was the all-American boy. You know what I mean. Everybody liked Roy. He was our class valedictorian and was voted most likely to succeed. Anyway, Roy and I lived in the same residence at college, but I didn't see him much.

Between studying, playing varsity basketball, and coming home to visit his girlfriend, he was a busy guy. A Surprising Referral "In second year, five of us, including Roy, decided to rent a house. The first month was unbelievable. You know how it is.

You aren't far enough into the courses to have papers or mid-terms, so you party every night. Remember all the things I told you not to do at college? Well, I was speaking from experience.

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By the next afternoon he had dropped out of school and moved back to Port Huron. He had worked in construction for only ten years when he had his first heart attack. The doctors told him not to go back to physical work, but unfortunately he wasn't qualified for much else. To his credit, he didn't give up. Instead, he trained to become a barber and eventually opened Miller's Barber Shop. Miller worked as a maid during the day and as a waitress at night. Neither of them made a lot of money, but together they had enough to get by.

Miller died, Roy felt that he had no choice but to quit school and go home to work. There was no way Mrs. Miller and Roy's younger sister, Ellen, could survive on a maid's pay. And, like so many people, Mr. Miller hadn't carried enough life insurance. He had learned the tricks of the trade from hanging around his father's shop. When his dad was really busy, Roy would cut hair to help out.

In fact, in our first year at college, he cut hair in the residence halls to make some extra money. He was going to operate the barber shop until Ellen had completed college, and then he was going to sell it and go back to school. His sister was only in tenth grade at the time, so he was looking at about six years. A Surprising Referral "We all felt bad about Roy having to put off his dream of becoming a lawyer, but deep down we knew he was doing the right thing.

You've got to be there when your family needs you, even if it means personal sacrifice. You would do well to remember that, son, when your mother and I are old and want to move in with you.

This isn't going to be one of your famous three-hour stories, is it? I'm getting to the financial part. He did some things that at the time were unique. Without a doubt, the most innovative and profitable was 'the hair truck. One is going to auctions and the other is tinkering with old cars and trucks. In his second year at the shop, he combined the two hobbies beautifully.

Then he put in a basin complete with running water, a power supply, and even a magazine rack. On Tuesdays, Roy took the hair truck to some of the local factories. He lifted the sliding door on the back and, voila, he was open for business. The workers flocked over during their breaks and lunches. It was so convenient. What was the worst day of the week for most barbers was now Roy's best. In fact, he did so well on Tuesdays that he hired another barber to go back on Wednesdays and Thursdays.

Eventually, a new ordinance put a stop to all the fun. But in the four or five years the hair truck was in operation, Roy brought in a lot of business and, more important, built a large and loyal clientele.

We've never discussed what we make, but I would think our incomes over the years have been quite similar. A Surprising Referral "What happened to the six-year plan?

It's as simple as that. To this day, he loves working downtown, dealing with people, owning his own business, all of it. It's funny, but Roy has really lived up to his most-likely-to-succeed billing. I don't know a more successful, well-rounded person. I have to be home by Sunday, you know. I'm getting there. Roy was really shaken by the poor financial shape his mother had been left in. His father had had no pension, no savings, and very little insurance.

Roy laughs now when he says the only thing his father left them was a mortgage, but it wasn't funny at the time. Yet after a couple of years running the shop and making a good income, Roy had very little to show for his efforts. His mother and sister were being well taken care of, but financially, that was about it. He started reading everything he could on money management. At that time, almost all financial books concentrated on investment alternatives, not on mundane topics like saving, buying a house, and insuranceyou know, the common person's concerns.

They all showed what to do with money once you had it, but they didn't tell you how to accumulate it. Roy reasoned that that certainly held true for sports, so it probably held true for just about everything else, too, including financial planning. He went to visit Maurice White. White was one of the wealthiest men in town.

He owned a jewelry store, a huge farm, several A Surprising Referral racehorses, and half the real estate downtown. Included in those holdings was the building that housed Miller's Barber Shop.

White had always liked Roy. He admired him for his loyalty to his family, and he was also impressed with Roy's entrepreneurial approach to increasing business.

When Roy told Mr. White why he had dropped by, Mr. White nodded. I'll teach you the golden secret of financial success in one hour. I venture to say there aren't many barbers who started with nothing and today own a beautiful house on the lake, a large investment portfolio, an office building, and have their retirement well taken care of.

What was it? It's not that simple. Roy continued to read and learn about financial planning. His knowledge of insurance, retirement plans, and investments has really helped him. But there's no doubt that hour was the catalyst. I'm not telling you any more, though. Roy teaches financial planning better than anyone, and I know he'll be more than happy to share his knowledge with you. In fact, I've already told him that you won't be talking just about the Tigers tomorrow. You'll be astonished when you learn how easy it is to handle your finances properly.

If you listen to Roy, you'll never have any financial worries. You'll be so wealthy you'll be able to build your mother and me a guest house down in Ann Arbor. How much do those sessions cost? I bought my own tanning machine," an embarrassed Cathy replied. I slave all day at the plant to make ends meet and you're buying your own electric beach! If you'd just work on your personality a bit, I'd ask you to marry me.

Bigamy is illegal, you know, Tom," Cathy pointed out. What happened to, 'Excuse me, miss, can I buy you a Porsche? To meet women, a man's gotta do what a man's gotta do. Besides, that Porsche line has served me pretty well over the years. I had some extra money, and I love being dark.

Besides it didn't cost all that much. You must own half of Port Huron by now. With my car payments, mortgage payments, condo fees, credit cards, and daily living expenses, there's hardly anything left. It never ceases to amaze me. A Surprising Referral Anyway, the truth is, I've blown my money pretty badly.

Except for my down payment, my furnishings, and a small IRA, I haven't saved much at all. I get calls all the time from brokers and insurance agents who want to give me advice, but I distrust insurance agents, and I don't understand a thing brokers say. You won't believe the conversation I had with Dad last night! That's why I didn't go out. I wanted to discuss financial planning. With Sue and me about to have a baby, I want to start investigating things.

We're looking for a house now. I'll need insurance You must be kidding," Tom scoffed, between mouthfuls of his tenth piece of toast.


I didn't know he knew anything about money. Then he learned the basics of financial planning and now he says he's in great shape. And you guys won't believe who taught himRoy Miller.

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You know how we figured Roy's wife must have inherited some pretty big money? It turns out the house, the Lincoln, the boateverythingwere all earned through good financial planning.

Roy started from scratch and with only average earnings turned himself into one wealthy barber. In fact, our favorite barber is going to start teaching me this morning. Dad says Roy will tell me all I need to know to gain financial peace of mind. Do you two mind if I tag along today? A Surprising Referral "No, come on along," I invited her. Maybe one Saturday years from now, we'll be eating brunch on the Mediterranean, remembering this as the most important morning of our lives.

Thacker's shave, if you can call it a shave. I don't think Mr. Thacker has had any facial hair growth since he turned ninety, five years ago. Thacker inquired, looking me straight in the eye.

I always get you confused with your brother. You're thinking of" "Dear me, what happened to your brother? The poor boy couldn't have been more than thirty! You're thinking of" "Oh, yes, I'm sorry. I thought you were one of the Richardson boys, the principal's sons.

Thacker had started for the door. The Wealthy Barber "Are you kidding, Davey? He knew who you were the whole time. It's all an act. He figures I won't ask him to pay if I think he's losing it. If I gave a free cut to every weirdo who came in, I'd be broke in a month, and you two boys wouldn't have paid in years.

I myself didn't find that line particularly funny, but it got a couple of knee-slaps from Jimmy, who was reading the paper in the corner.

I heard it was ninety-eight degrees down there yesterday. He'll be on a liquid diet for sure. I always go before Tom, who insists on making sure that Roy is warmed up before he'll go near him. With Sue and me about to buy a house and have a baby, I figured it's time I learned a few things.

Dad told me you know more about financial planning than anybody, so Cathy, Tom, and I are hoping you can teach us the basics. As I told him, I'd be. The Wealthy Barber more than happy to help out. He came to see me several years ago himself, and we put him on the right track. That's good news. But he had some money to invest. I'm not sure you'll be able to do much for me. The only money Sue and I have is what we've saved for our down payment.

Financial planning is really nothing more than the proper handling of cash flow and assets to meet your objectives. Oh, there are wills and insurance and a few other things, and we'll talk about all that later, but basically, how you handle your income and assets will determine your success. Most young people don't have any assets, except maybe a home.

So, it comes down to managing your cash flow. Everybody's terrible at that. Very few people have become financially successful through budgeting, and the ones who have aren't much fun at parties. I sure never have any left at the end of the month. I spend everything. The better business gets, the more I spend. I admire your enthusiasm, but let's slow down a bit.

I've done it for lots of people, these clowns included," Roy said, nodding at Jimmy and James. Seven months from now, you'll be on the road to prosperity, and you'll tell everyone that Roy Miller is the greatest man who ever lived.

The Wealthy Barber "How can you teach us so much in so little time? I mean, Roy, you really are working with novices. Tom and Dave and I are financial idiots! You'll have to worry about the other part yourselves. Trust megood financial planning is nothing more than common sense. The old KISS philosophy at its best: Keep It Simple, Sweetheart.

These are the average American's goals. Especially if you start young. Time is your greatest ally. If you three start now, I guarantee you that you will exceed all your goalsdramatically. I'm a barber, for crying out loud!

I'm proud of my business, but I'm the first to admit that I'm not pulling in a doctor's salary. Far from it. Yet you'd be hardpressed to find many professionals with better financial statements than mine. I hope it doesn't sound like I'm bragging. It's just that it's important for you to know that if someone as simple as me can become wealthy, it's certainly possible for you geniuses. Maybe a bit slow, but not simple," Tom wisecracked.

Your dad and I talk about this all the time. Our schools don't teach money skills. Our family members don't talk money. And just as important, there are very few places that an aspiring learner can turn to. The Wealthy Barber "Yes, there are many excellent financial planners, and when it comes to fine-tuning and implementing your plan, they can be a great help.

But when you're originally developing your plan, you must take responsibility for your own future. As I said earlier, the great thing is it's not hard. What is it? I'm saving that for next month. If you only pay attention once in the next seven months, let it be next month.

If you follow that lesson, even if you do everything else poorly, I guarantee you that someday you'll be rich. I'm taking care of her for the afternoon. Emily's only three years old and I don't want to scare her off men for the rest of her life.

Roy had really piqued my interest. I've known him all my life, and he has always come across as a very modest man. The matter-of-fact confidence he displayed when discussing Tom's, Cathy's, and my financial futures was out of characterand contagious.

I had no doubt that I had taken the first step along the road to financial prosperity. A north wind had come up and was blowing at fifty miles an hour.

That, combined with a torrential downpour, had caused most people to stay inside. Most smart people, that is. There was no way Tom, Cathy, and I were going to miss out on the golden secret. We had been looking forward to it for a month. We were so excited, we even skipped breakfast at the Thomas Edison.

As usual, I drove. My parents' house has indoor access to the garage and both Tom and Cathy have underground parking so, surprisingly, it was possible to remain perfectly dry until we arrived at the shop.

On the way there, Cathy suggested that Roy might be closed because of the weather. Tom and I just laughed. Roy hasn't missed an entire day of work in thirty-seven years for any reason. He had even opened on the morning of his daughter's wedding. With so few people venturing out, we were able to get the parking spot right in front of Miller's. Between our umbrellas and his awning, we managed to get from the car to the shop door relatively unscathed.

The Ten Percent Solution It was locked. Clyde, with his Florida tan, was standing on the other side peering out through the glass. We've got coffee brewing," he chirped in his reedy voice. By this time, we were starting to get pretty wet. And annoyed. The angle of the rain was such that it was impossible to protect ourselves completely, even with the help of the awning and umbrellas. Tom and I stood stoically. Clyde shook his head and let all of us in.

You should seek professional help. It's terrible out there," Roy commented. And miss our long-awaited, eagerly anticipated first lesson? You've got to be kidding! I'm not sure why I always use James Murray's given and family names. You should know that by now," Roy replied as he straightened up the counter. My financial situation is getting worse instead of better," Cathy began impatiently.

As your father has probably told you, I took over this shop thirty-odd years ago when my dad died. I got lucky and a few of my ideas paid off. After a couple of years, I was making a pretty good income.

Very good for a barber. I added a couple of chairs in The Ten Percent Solution the other room and, all in all, things were moving along well. I knew my income from the shop was respectable, but it was never going to make me a rich man. That bothered me because, frankly, I wanted to be wealthy. I grew up poor and, believe me, it's something you don't acquire a taste for. I didn't want to live in town in a tiny, one-bedroom homeI wanted to live on the lake.

I wanted to own this building, too. I wanted a nice car, trips to Europe, and some of the other fine things life has to offer. Or, at least, that's what I thought. So, I developed a budget: Two years after starting to budget, I had very little to show for it. Sure enough, at the end of each month I'd end up saying, 'So much for savings,' but, unfortunately, it didn't mean what I had hoped it would mean. It was pretty depressing.

I didn't have a father to turn to, so I went to a person who I figured must know a lot about money, he had so much Old Mr. I told him what I wanted to achieve. Ts it possible? Invest ten percent of all you make for long-term growth. If you follow that one simple guideline, someday you'll be a very rich man.

I felt the same way myself. I wasn't very impressed when Mr. White told me, either. My budget was already designed to save even more than ten percent and, at that point, it The Ten Percent Solution wasn't working and I was far from wealthy. But Mr. White went on to explain a few things that I'll tell you now. I don't know I'd say two hundred thousand. Maybe not quite that much," Cathy concluded. The answer is one point four million dollars," Roy declared. When he realized that Roy was serious, he paled.

And where am I going to get fifteen percent? For that matter, where am I going to get two hundred dollars a month? Dave, you try one. If you had started putting thirty dollars a month away, the equivalent of a dollar a day, at age eighteen and you continued until age sixty-five, averaging a fifteen percent annual return, how much would you end up with? Thirty dollars a month is three hundred and sixty dollars a year, times fortyseven years.

Anybody have a calculator? I'll say around seventy thousand. The magic of compound interest. The eighth wonder of the world. Thirty dollars a The Ten Percent Solution month, a dollar a day, will magically turn into more than two million. And do you know what's even more impressive? You know someone who has done it," Roy said proudly. I have achieved just under a fifteen percent average annual return.

In addition, as my income rose, my ten percent savings component rose accordingly. Thirty dollars a month became sixty dollars, then a hundred, and eventually hundreds of dollars a month. Roy Miller, a millionaire? To the best of my knowledge, I'd never met a millionaire, and I sure didn't expect my first to be my barber. Roy was clearly deriving great pleasure from the disbelief on our three faces.

But if they had invested that money at eight percent interest, today their investment would be worth trillions of dollars. Take your dad, Dave. If he had started his program at the same time I did, you'd be looking at a big inheritance down the road. The Ten Percent Solution lucky to save two hundred a year and, even if I could save money, I don't know anything about investingthe stock market, options, commodities. C'mon, Roy, you've got to be kidding!

Saving money is never easy. No oneand I mean no onehas devoted more time to developing a budget than Susan and I. Yet every month, apart from our down-payment fund, we haven't managed to save a cent. As for investing, the only investment I've ever made was in a penny stock. I lost six hundred dollars in one week. Six hundred dollars that I couldn't afford to lose. Six hundred dollars that I needed for my tuition.

But not a devastating one. In fact, inflation is all the more reason to save. Things are going to get more expensive. Lakefront properties are going to continue to rise in price. Lincolns are going to cost more. But, believe me, if you save ten percent, you'll be parking your Continental beside your vacation home someday. Remember that your wages will continue to rise too, as will your ten percent savings. My original ten percent stake was only thirty dollars a month; yours will be much more and so will your total wealth.

That will do a lot to offset inflation. If you handle your savings wisely, your growth rate should far exceed the inflation rate. Maybe not every year, but certainly on average. Let's talk about saving the money first. When people think about saving, they think The Ten Percent Solution about budgeting. I'll allot so much of my income for this, so much for that, et cetera, et cetera, and at the end of the month, I'll have so much left over. But as each of us knows all too well, something goes wrong.

Money keeps running out before the month does. When I took over the shop, it was obvious that cost management hadn't been one of my father's strengths. I designed a detailed budget that covered all my potential expenses. I stuck to it like glue. That budget played a major part in my early success. To this day, I still do a shop budget once a year. And I still stick to it.

I discussed the situation with Old Mr. I'll never forget his reply. It's in the best interest of the business to limit those needs as much as possible. An individual, on the other hand, must budget for both needs and wants. It is a rare person who can do that successfully because, for too many people, a want becomes a need. Did I need a new car in my second year of business, or did I just want one? Cathy, did you need to get away to Europe last winter, or did you just want to?

Tom, did you need, or just want, the best stereo available? It's human nature to spend our entire disposable income and to rationalize all those expenditures as needs. One of the reasons I make money is to spend it on things I like," I argued.

That's exactly what I said to Mr. Remember, I grew up poor. My first couple of years at the shop was the first time I'd ever had any fun money. White The Ten Percent Solution explained. I think you can see that. Luckily, there is an almost painless way to savea way to save where you barely notice the money is gone!

In the over twenty years I had known him, Clyde had not said one serious thing. And that's not an exaggeration. That he was even paying attention to such a no-nonsense conversation was startling, let alone that he seemed eager for it to continue. Pay yourself first. Old Mr. White knew what he was talking about when he told you that," Clyde nodded. I can't tell you what those three little words have meant to me," Roy reflected.

White announced that the only way to save is to pay yourself first. Although he was talking about saving the ten percent, the axiom holds true for all savings. Whether you're saving for a down payment, a car, a trip, whatever, the most effective thing is to have the money come right off your paycheck, or right out of your bankbefore you have a chance to spend it.

But we'll talk more about saving for those kinds of items in a few months. I was helping my mom and sister get by, paying my shop's rent, making The Ten Percent Solution car payments, and trying to save for both a down payment and an engagement ring.

And I wasn't meeting with much success. In my mind, there was no way I could set aside an additional ten percent. Where was I going to get that thirty dollars a month? There was nothing left at the end of the month as it was. I had tried budgeting and that hadn't worked.

Then Mr. White made a very generous offer. If at any time saving that thirty dollars runs you short of funds, I'll lend you whatever you need at no interest. You can pay me back whenever it's convenient for you. Anyway, I never did miss that money.

My lifestyle didn't change at all. I know thirty dollars doesn't sound like much now, but remember, it was ten percent of my income back then, and I never missed it. Actually, that's Clyde today, too. In the early eighties, Clyde told me he had his eye on a gorgeous twenty-thousanddollar sailboat that he'd love to have for his 'retirement home.

I reminded Clyde, though, that by the time he retired in '99 or so, thanks to inflation that boat would cost a pretty penny more. The only way he would be able to afford it would be to start putting aside money right away. We started him on a couple of hundred a montha very big chunk of his income back then. I'll have to go Dutch on my dates. Four months after we started the sav The Ten Percent Solution ings program, I asked him how he was struggling along without the two hundred dollars a month.

He said, 'Geez, I'd forgotten all about that. He'd forgotten he was even doing it! Over the years I've taught dozens of people the pay-yourself-ten-percent-first rule.

Chilton - The Wealthy Barber

Not one has noticed a dramatic change in his or her standard of living. He'll tell you. It really is amazing.

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You know how quickly you adjust to your raises? Well, this is pretty much the same thing, but in reverse. But today I'm not only looking at a boat; I'm looking at a pretty darn good retirement overall. If you three start at your age, the sky's the limit.

A house, in particular, is a major expenditure. There is no way to achieve some goals without sacrificing your current standard of living I mean, let's be realistic.

But the ten percent saving is different. It's regular. It's a constant. You don't even see it. It comes right off your paycheck or out of your bank. You won't believe how easy that makes it. But I'm still curious about those fifteen percent rates of return," Tom persisted.

I want no part of that. It has to. If it's consistently more profitable for businesses and individuals to leave their money in the bank than to invest it in North American enterprises, we're all in big trouble. Eventually, our whole economic system would collapse. That isn't going to happen. And in the unlikely event that it did, it wouldn't do you any good to have your money sitting down at the bank. VCRs, microwaves, gas barbecues. Technological advances, medical discoveries, social programs The fact is, we're living in great times.

If you're healthy and living in the U. And these are serious problems. Unfortunately, we'll always have serious problems. However, equating 'serious' with 'fatal' would be to greatly underestimate this country.

The United States is beset with racial, industrial and commercial chaos, drifting we know not where.

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Of our troubles, no man can see the end. It was written in Harper's Magazine. Do you know when? I think you get my point. The Ten Percent Solution "I believe that the next twenty to thirty years will present some of the greatest opportunities ever.

So much change. So many things happening. The only way to be a part of it all and to share in the successes is through ownership. Admittedly, our examples using fifteen percent are probably too optimistic. Certainly, that's more than most asset classes have averaged over even long time periods. However solid rates of return that easily outpace inflation are definitely within reach through ownership. Needless to say, this caught me by surprise. I don't know anything about stock analysis, and I don't have any friends who do, either.

It's a tough game. You have to be disciplined. To perform well, you have to buy when everyone else is selling and sell when everyone else is buying, a rare combination of guts and brains. You have to have a good background in investment analysis, and you have to use that background to look into the future. You not only have to see the various companies' management teams, you have to know what questions to ask them.

Most of all, you have to have a sixth sense, an intuition, a knack of recognizing value. Very few people fill the bill.

I certainly don't. I mean, think about it. Do you know anybody who's become rich buying and selling stocks? There aren't many. It's just too difficult. They must know what they're doing," I asserted. The Ten Percent Solution "Dave, most are salespeople. That's it. Instead of selling shoes or beds, they're selling stocks. They spend all day on the phone talking to clients, reading research reports, looking at indecipherable financial statements.

In the five years I was a broker, only one guy in our office turned a profit in his personal trading account. I was the worst! I thought I was a hotshot because I was driving a fancy car, eating at pricey restaurants, and taking home a hefty check.

Unfortunately, I couldn't have consistently picked winning stocks if my life had depended on it. My commissions were great but my clients' investment performance was dismal. It hit me hard when I realized it's all a game. You know what still bothers me? Most of my clients were really happy with me.

I gave excellent service, was nice on the phone, threw good cocktail parties, and knew all the right things to say. I know I could have remained a prosperous broker for years, losing people's money the whole time. He'd been a broker for thirty years and was very well thought of. When he retired to his summer home and yacht, his accounts were divvied up. I got ninety of them, some very good. I started examining what he had been doing for the clients so I'd be well informed when I called to introduce myself.

I'll never forget it. Of ninety accounts only seven were up money over the years, and only one of those was up dramatically. Some don't stay. They switch to other brokers, who often also end up losing them money. Others don't care, because they play the market for excitement more than profit. And I know this sounds hard to. The Ten Percent Solution believe, but I'm convinced that many don't even know whether they're up or down.

He had started with fifty thousand and, fifteen years later, he had fifty-five thousand. He didn't understand that if he had just left the money in the bank, he would have had substantially more than fifty-five thousand.

Like so many others, he didn't understand compound interest. Most investors and brokers cut profits and let losses run. Those losses are easily covered by the large profits created through a combination of buying value and exercising patience. Brokers know they look bad when they choose a loser, so, rather than selling and accepting a loss, they perpetuate this myth.

A stock doesn't know you own itit's not going back to twenty-two so you can get out even. So, you often end up holding as the stock goes lower and lower. I didn't mean it that way. I think reluctance to admit a mistake is human nature, not deliberate dishonesty. Sometimes we can't even admit to ourselves that we were wrong. The Ten Percent Solution commissions.

I saw very little of that while I was a broker. For the most part, I don't think that brokers' poor investment performance has anything to do with ethics. Picking stocks successfully is very difficult, and most of us just aren't capable of doing it. And, like I said earlier, most brokers are salespeople not investment advisors.

The bottom line is, if brokers were really so smart, they wouldn't need clients. But there are a lot of fine brokers out there and, used properly, they can be a big help in achieving financial success.

I guess that leaves real estate. What should we do? Buy a square foot each month with our two hundred dollars? Is there such a thing as a twohundred-dollar parcel of land? We'll get into that later, too. First, let's look at what I think is the best alternative for investing the ten percent, at least for most people: Don't equity-oriented mutual funds own primarily common stock? The Ten Percent Solution "I didn't say that the stock market is a losing game.

I said that buying and selling stocks on your own or on your broker's advice is usually a losing game. The stock market has actually been very good to investors who have the qualities we spoke of earlier: You won't be making the individual investment decisions. A professional will. The pool is made up of money from people like you and me, people numbering in the thousands.

We all put our money together and hand it oyer to someone who knows, or supposedly knows, what he or she is doing. Most important is the one I just mentioned: