Product Description

Now completely revised and updated, the Jorgensens' classic guide to increasing wealth provides solid advice on investing, paying taxes, buying insurance, and more...in good times and bad.

You can get rich -- regardless of age, income, or marital status -- by simply following the advice of financial duo Jim and Rich Jorgensen. It's Never Too Late to Get Rich explains how to apply their tried-and-true rules of financial planning in any financial climate, taking you through a process built on nine foolproof, easy-to-follow strategies:

• Pay yourself first

• Don't be a lender

• Kill those credit cards

• Be willing to accept some risk

• Build a rock-solid investment portfolio

• Invest with technology

• Delay your taxes

• Buy adequate life and disability insurance

• Work with a financial planner

Here too are invaluable guidelines on saving and investing in a crashing or soaring stock market, on minimizing taxes, and on preparing for big expenditures like education and retirement. Fully updated with information on new ways to earn interest, the latest financial websites and resources, and much more, It's Never Too Late to Get Rich is your reliable guidebook toward the financial security that you've always dreamed of.

Product Details

• Amazon Sales Rank: #640746 in Books
• Published on: 2003-03-04
• Original language: English
• Number of items: 1
• Binding: Paperback
• 256 pages

From Publishers Weekly
Jim and Rich Jorgensen, father and son co-hosts of the radio show The Jorgensens on Money, offer a straightforward, no-frills way to save money with It's Never Too Late to Get Rich: The Nine Secrets to Building a Nest Egg. They show how a few modest steps-e.g., brown bagging lunch once a week; renting a video instead of going to a movie-can help save hundreds of dollars. They also advise investors to pick a stock or mutual fund and keep their money there until they need it, regardless of the market's turbulence. Inexperienced investors and people nervous about handling money will find this primer helpful. But while the tax and retirement sections are updated and there's new material on choosing financial planners, the book is otherwise practically identical to the edition originally published in 1994.
Copyright 2003 Reed Business Information, Inc.

About the Author
Jim Jorgensen is the author of six books on personal finance, including The Graying of America, and is co-host of the nationally syndicated radio show It's Your Money. He is a frequent speaker at conventions and meetings and lives in the San Francisco Bay Area.

Excerpt. © Reprinted by permission. All rights reserved.
From Chapter 2

Don't Be a Lender

Lenders take a big risk on what their money will buy in the future.

Individuals have lent money in return for interest payments since money was invented. It was not until 1472, however, when what many consider to be the oldest bank in the world, the Monte dei Paschi di Siena in Italy, introduced the forerunner to the passbook savings account. The idea that banks could attract individuals' savings and keep track of their accounts opened the door to massive lending. In Renaissance times, bankers like the Medicis and the Fuggers, with their state-licensed money machine to attract depositors' money, grew immensely wealthy.

Beyond the Passbook

The passbook savings account remained the principal mode of individual savings for almost five hundred years, until the advent of computers after World War II. The first stage of the ongoing technological revolution was internal. Since banks and thrifts are nothing more than giant counting houses, it was easy to run the entire customer list past the computer each day. Earned interest, which had been posted once a month or once a quarter, could now be posted every night. It was a small step, to be sure, but in the merchandising of money, it was a fundamental innovation.

In 1969, an enterprising young executive of the Worcester Five Cents Savings Bankpetitioned the Massachusetts Banking Department for permission to offer a negotiable order of withdrawal account. A NOW account was, in effect, a computer-driven checking account that paid interest on the balance in the account. The executive knew he was skating on thin ice because at that time it was illegal for federally insured banks and savings and loans to pay interest on any monies on deposit for less than thirty days. However, the Massachusetts savings banks had their own deposit insurance fund, and Massachusetts law did not have the same tight restrictions as those that governed the federally insured banks and thrifts.

The state bank regulators gave his suggestion of using computers to track interest rates on checking accounts a frigid reception and turned him down cold, but the enterprising executive believed he had found a formula that could pry open the regulatory gate. He sued and he won. Thereafter, it became possible for state-chartered savings and loans to offer checking accounts that paid interest. For the first time since the advent of banking in the late 1400s, banks faced competition for the "free" money their customers had been forced to keep in non-interest-bearing checking accounts. As a result, Congress authorized NOW accounts for federally insured banks and savings and loans. Today, we take for granted that computers make money market accounts, certificates of deposits, NOW checking accounts, and an endless array of mutual funds possible. But what it all comes down to is that there are only two ways to put your money to work: as a lender or as an investor.

A Lender Be

As Will Rogers said in the days of the Great Depression, "I'm not so concerned about the return on my money as the return of my money." Many people still feel that way. Their first objective is to keep their money safe. Therefore, lenders are willing to accept lackluster interest returns of 4 percent or less in exchange for the assurance that their original investment will be returned intact. The only decisions they have to make are the length of the deposit term and the interest rate they'll accept.

When you deposit money in a savings account, you are lending money to a bank in exchange for interest income. After the Great Depression and scores of bank failures, many lenders felt they were walking on a financial high wire. To give them the safety they required, Congress established the Federal Deposit Insurance Corporation (FDIC) to protect up to $100,000 per account. Banks and thrifts offer two basic instruments for earning interest income.

Money Market Accounts

Think of a money market account as a computerized passbook savings account. In the banking trade, they are called demand deposits. The main attraction is that you can make deposits and withdrawals any time you like. For this privilege you earn about 1 or 2 percent less interest than a fixed-term deposit. Moneymarket mutual funds -- while not federally insured -- have had the same safety record as bank money market accounts, and they pay as much as 1 to 2 percent more interest than bank money market accounts.

Are money market accounts and passbook savings good for banks? You bet they are! Over the past two decades, the banking industry has been sustained by the profits from ultra-low-yielding savings accounts squirreled away by worried or uninformed lenders. The good news -- not for lenders but for taxpayers -- is that without these billions of dollars of low-interest money, the recent financial bailout of banks and savings and loans would have cost a great deal more. Are money market accounts good for long-term investors? Probably not. Like millions of Americans, I started out with a passbook savings account. It held every penny of my entire wealth. My vision widened as I grew up and watched the numbers in my passbook increase. It turned out, however, that I would never get rich on 2 percent interest a year. I decided that when I had real money to invest I would put it to work in the stock market.

Fixed-Term Deposits

Insured certificates of deposit are term deposits. Terms are available from six months to as long as ten years. Like bonds, the longer the term, the higher the yield. Six-month insured CDs might yield 3 percent, but a five-year CD could yield well over 5 percent. To keep the money locked up inside the bank once you've made the deposit, the bank imposes a penalty for early withdrawal. The penalty is the loss of interest income for various periods, from ninety days to six months.

The problem with an insured CD is that if interest rates later rise, you are stuck with the lower yields until your CD matures, just as you would be with a bond. In your search for higher yields, you must withdraw the CD money and possibly pay the hefty early-withdrawal penalty. On the other hand, an insured certificate of deposit and money market account are the only interest-income investments where your principal is unaffected by changing interest rates. For example, if you deposit $1,000 in a one-year CD, you are assured of the return of the $1,000 one year later. With FDIC insurance, a bank failure along the way is no problem. Your money is safe. Or is it? In truth, the assured safe return of your money in the face of rising inflation puts your money at great risk. The shrinking dollar a lender gets back at the end of a CD term has less value in purchasing power than when it was invested in the first place.

Here's what I learned while talking to a farmer over a hay rake: If you earn only the inflation rate in interest, you can go directly to the poorhouse without passing go or collecting $100.

Let's say you deposit $10,000 in a one-year insured CD paying 4 percent interest. One year later, you'll get back $10,000, plus $400 interest, or a total of $10,400. However, the IRS does not love lenders. Eachyear the interest income you earn is taxed at your ordinary income tax rate. Let's say you're in a 28 percent federal and state tax bracket. The $400 of income can then shrink to $288, which leaves you with a net after-tax return of 2.9 percent. Now let say that over the past year inflation has risen 3 percent.

Here's how taxes and inflation can drain the real value out of your money:

• Invest in a 4 percent insured CD $10,000
• One year later, with interest $10,400
• Less taxes @ 28 percent  $2112
• Less inflation @ 3 percent  $2312
• Purchasing power of the CD  $9,976

You may feel good about yourself; you might have a lot of ideas about how you'll spend your money in retirement. But the fact is that over the years, in terms of real purchasing power, your saving account resembles a highway truck stuck in the mud going nowhere.

If you want to preserve the future purchasing power of your money, you must earn a long-term return substantially higher than inflation and taxes. That means dumping your low-yielding fixed savings accounts and investing in bonds, stocks, or equity mutual funds for their potential double-digit returns. What's that? You say you are scared to invest in the stock market?

The cold, hard fact is that you can't put your money to work without some risk.

• You can play it safe with a low-yielding federally insured savings account and risk losing out to rising inflation and taxes.
• You can reach out for higher yields with bonds and risk the possible loss of your principal.

Bond Basis Risk

If you've ever wondered why some people earn 3 percent in a money market account while others earn 7 percent on bonds, it's because the higher yields carry greater risks to principal if interest rates later rise. If you think this sounds a bit cold-blooded, you're right.

Over time savvy lenders, dissatisfied with the skimpy yields on money market accounts and certificates of deposit, have discovered that they can sometimes double their interest income with bonds or bond mutual funds. However, before you invest in a bond or bond fund, you need to know how bond basis risk can take a safe, guaranteed investment and turn it into a loss of principal. It's also important to understand that bond basis risk holds true for any bond -- government, tax-exempt municipal, high yield junk, or blue-chip corporate bonds.

In other words, if you ever want to become a savvy investor on Wall Street, you must understand that changes in interest rates can change the market value of any bond or bond fund. Without this knowledge, you can get clobbered when interest rates rise.

Bond basis risk mean...

Customer Reviews

GREAT BOOK! Understandable, humorous, practical
This book really helped me to bring my financial house back in order after suffering some tremendous stock market losses in the past 3 years. After reading this book, I have new confidence on how I can move forward without risking my assets. There was other great information as well on reducing taxes and preparing for retirement. I have listened to Jim and Rich on the radio for years and they know what they are talking about. I would recommend it to everyone. It's really good information.

Easy to read and get motivated
I found this book to be an easy read and very easy to understand. I was somewhat intimidated about changing my investing habits, but after reading this book, I felt that I had the tools I needed to move forward and get started. This book motivated me to really look at my investments and make an action plan

A most needed guide
Sara and I have struggled with financial planning particularly as a result of the recent market turmoil. The Jorgensens' book has served as a much needed guide to managing our money. It emphasizes the basics and is understandable. Unlike other investment books which fail to encompass the whole picture, this book is complete and thorough. We would recommend it to anyone interested in taking a proactive role in managing their money.