Mark Ford’s Message to a 47-Year-Old With No Money


A reader wrote recently to say that, although he’s “learned a lot from” our publishing he feels that most of the advice is not suitable for him, because he is 47 and has a net worth of only $25,000. He is not interested in long-term saving strategies. “What good will compound savings do for me?” he says. “I don’t want a million dollars when I’m 70. I want it now.”

He says that many of the wealth-building strategies we recommend are useful only for the rich:

What’s the average person to do? He can’t open six businesses in Nicaragua like Mark. He makes $27 per hour with no chance for overtime. He has debts. He needs a new car. He has very limited silver and gold. AND he doesn’t write a newsletter for $49 per month with 100,000 subscribers, earning a cool $4.9 million per year.

Since we started publishing The Palm Beach Letter, we’ve gotten a number of letters like this. This tells me two things: We are hitting a nerve by telling the truth, and there are lots of PBL readers who have few financial resources and are worried about the future.

If you have had some of the same thoughts or feelings, this essay should be very useful to you.

You are middle aged. Your net worth is meager. Your income is barely sufficient to meet expenses, and those expenses are going up. The Great Recession is looming. Economists are predicting things will get worse. What can you do?

Should you give up your dream of retiring comfortably one day? Should you accept a future of increasingly meager existence? Should you grow bitter and curse the powers that be for putting you in this situation?

Or should you take responsibility for your situation and make changes?

That last question was rhetorical, of course, but sometimes I wonder if people really do understand their options. There are things that happen in life that we can’t control. But we can control the way we respond to them.

I believe—no, I am certain—that anyone who has modest intelligence and a positive attitude can become financially independent in seven years or less if he or she is willing to work enormously hard. But I also understand that when you are halfway through your life and are barely making ends meet, it seems like the only chance to become financially successful is to win the lottery (either an actual lottery or the stock market equivalent of one).

And so, when you hear some rich guy from Palm Beach telling you that you can’t quickly turn $25,000 into a million by investing in stocks, it may be frustrating. And when he talks about what he and his rich friends are doing—buying rental properties and starting businesses overseas—you might feel that you can’t use his advice.

If you feel that way, you are wrong. You do not have to give up on your dream of being wealthy. You always have the ability to change your financial life.

But it will take a bit of time and patience. And it will require that you change some of the thoughts and feelings you have about wealth and your relationship to wealth. To make these changes, you need to do four things.

First, accept the fact that you alone are solely and completely responsible for your current financial situation. Before you react defensively, read that sentence again. I didn’t say you are the cause of your situation. I said you are responsible for it.

By taking responsibility for you current condition, you also assume responsibility for your future. Nobody can change your fortune but you. And nobody else will. The sooner you accept that reality, the sooner you will shed the anger and blame and begin to feel financially powerful. Without it, you cannot move forward, even by a single inch.

Second, set realistic expectations. I can’t tell you how many times I’ve had unwealthy people scoff at the 8% or 12% returns that we look for in our performance portfolio—the stocks we recommend every month in The Palm Beach Letter.

They tell me returns like that are ho-hum. They want stocks that double and triple, they say, because that’s the only way they can see themselves getting wealthy.

I remember once I made a presentation to a small group of investors about an investment I liked that was likely to return 30% per year. One guy interrupted to tell me I was wasting his time. “Unless you can give me a 10-to-1 return, I’m not interested he told me.” A few people applauded him.

When I hear remarks like that I think, “poor bastard.” His mentality is that of a poor man looking for a lottery-ticket type solution. If he wasn’t financially poor when he made that remark, I’m quite sure he is now.

Know this: 8-12% is a high rate of return. If you get an 8% return, you’ll double your money every nine years. If you get a 12% return, you’ll do it in six years. You can get very rich doubling your money every six years.

Or think of it this way: Warren Buffett—the most successful investor of all time and the third-richest person on the planet—has averaged 19.8% on his investments over his entire career. Expecting to make returns that are more than double that is just plain foolish.

The great thing about setting realistic investment expectations is that you can see very clearly beforehand how wealthy you can become over any given period of time. If you do the calculations and aren’t happy with the result, then you know that you can’t accomplish your goal by investing alone. You will need to increase your income. (I’ll be giving you ways to do that in future essays.)

Realize that the journey to millions of dollars is earned one hundred dollars at a time. As time goes on, the thousands become tens of thousands, and eventually they can get even higher. The most powerful rule of wealth building—the one that Albert Einstein himself talked about—is compound interest. But this takes some time. You must be willing to accept this fact in order to move your financial life forward. Wealth accumulates gradually at first, but it eventually builds up at lightning speed.

The third thing you must do is to understand how real wealth builders create wealth. The public today has been deceived on this important point by reading stories of Internet entrepreneurs or individuals who invested every cent they had in a single business idea that exploded into a billion dollar bonanza.

These are great, inspiring stories. But they are not normal. For every person who got rich this way, there are 999 who went broke doing the same thing.

I’m not diminishing these guys. They were brilliant and shrewd, but they were also very lucky. Using them as models is like a kid in the ghetto deciding he’s going to be Tiger Woods or Michael Jordan. It’s not a good strategy.

If you don’t have a clear idea about how to become wealthy, there’s one rule to start with: Never, ever take big chances. There is nothing especially brilliant about it. But it works.

And the fourth thing you must do is to recognize that your net investible income (the amount of cash you have after spending and saving) is the single most important factor in determining how quickly you will become wealthy. I will venture to say that you have never heard any other investment newsletter writer say this. But it needs to be said. You simply cannot get wealthy by investing unless you invest enough money.

Again, I will show you how to figure out how much money you need to achieve your goals.

If you discover that you don’t have enough net investible income, don’t worry. There are dozens of ways to increase that—even if you are 47 years old and making $23 per hour.

The world of wealth is governed by universal dynamics—supply, demand, wealth, greed, etc. These dynamics are as old as human civilization. Winning the wealth-building game is about recognizing and exploiting those dynamics, not denying them. What we do at The Palm Beach Letter is to highlight those dynamics on a weekly and monthly basis and then help you make smart, enriching decisions—the sort of decisions that have made men wealthy for thousands of years.

It’s not fun to realize, in the midst of your life, that you haven’t acquired the wealth you want. But the good news is that your past doesn’t have to be a prologue, unless you allow it to. You can change your fortunes today by doing the four things I’ve just told you to do.

Let me be a bit more specific:

  • Accept responsibility for your future. Refuse to complain, criticize, or condemn. If you want us to help you achieve your goals, then trust in and follow our advice. Stop doubting it. Stop denying it. Have faith.
  • Give up the foolish notion that you must get rich “now.” Be happy to earn 8% or 12% on your stock market investments. Realize that if you make 8-12%, you will be ahead of 99% of your fellow investors. Embrace the huge impact this will have on your wealth over time.
  • Begin to allocate your income according to the three-bucket system. With every paycheck you get, first cover your necessary expenses (bills, mortgage, etc.) Then put some money toward saving and then some money toward investing. Then and only then—after you have “paid yourself”—should you add to your “spending” account.
  • Stop complaining about making “only $27” per hour. That’s more than a lot of people make. Be grateful you earn that much. Commit to add to that with a second income. Make an honest count of the number of hours each month you devote to television and other non-productive activities. Devote them to wealth-building instead. Cast aside the comfortable shoes of victimization. Put on the working boots of a financial hero.

If you are willing to do that, we can help you succeed. We are giving you investment recommendations that will give you realistic 10-15% returns (and sometimes much more.) You can buy the books I’ve written on how to earn more money and save more money.

We are fully committed to giving readers more valuable and realistic wealth building advice than any other investment newsletter in the market. We have the experience and the know-how to do that. We will deliver if you do.

Now I want to address two more comments you made:

You suggest that you don’t have the wherewithal to implement some of my recommendations. You suggest that buying apartments and starting businesses in Nicaragua is something only wealthy people can do. You are dead wrong on this subject. If you are willing to work hard and smart, you can begin building a rental real estate empire with as little as a thousand dollars.

And the businesses I’ve started in Nicaragua can all be started for that kind of money or less. Again, I will explain how this is true in future issues and reports. If you stick around and trust us, you’ll learn how you can do the same.

The other comment I want to address is the one about how much money I am making with The Palm Beach Letter. I am going to say something now that I haven’t said before because I didn’t think it was necessary. But since you made the comment about how much money we are raking in at The Palm Beach Letter, and about how much I’m making, I need to say it.

Personally, I am not making any money from my work for The Palm Beach Letter. And I never will. Every cent of the compensation I am paid as a contributor will be put directly into my charity in Nicaragua.

In other words, I’m not in this for financial compensation. I’m in this to see if I can help thousands of individuals attain more wealth.

If I were in this for the money, I might be tempted to tell you what you want to hear so that we could sell more subscriptions. I could tell you, for example, that you can invest $25,000 in certain stocks and end up a millionaire in just a few years. But we are hoping that we can be successful publishers of good and useful information without making such promises. We want to help you by telling you the truth.

You are only 47, not 87. You have plenty more years to increase your income and grow your net worth. Why do you assume that all is lost when you have a whole wonderful life ahead of you, a life that can be rich in a hundred ways?

Everybody in your situation has the same choice: you can rue your situation or you can dedicate yourself to changing it. We can show you how.

You have what you need to get your gravy train moving. But you are the engineer. Nobody but you can start the engine.

[Ed Note: Mark Morgan Ford was the creator of Early To Rise. In 2011, Mark retired from ETR and now writes the Palm Beach Letter. His advice, in our opinion, continues to get better and better with every essay, particularly in the controversial ones we have shared today. We encourage you to read everything you can that has been written by Mark.]