How to get rich or richer?

When giving my tax-planning, wealth-building seminars, I like to ask the audience, "Raise your hand if you know the Rule of 72 and how it works." Typically, about one-third of the audience raises their hands.

I'll explain this rule to be sure that we all understand it. Write the number 72 on a piece of paper. Assume you are getting a 10 percent rate of return on your investment. Divide 10 into 72 and you get 7.3, or the number of years it will take your principal sum to double at that rate. For example, $10,000 compounding for a 36-year period will double five times and eventually become $320,000.

What if that 10 percent return was subject to a 40 percent income tax at the state and federal level? Then you would only have a 6 percent return because 6 into 72 results in 12-12 years to double your money. This means that $10,000 will only double three times over a 36-year period.

When you compare $80,000 to $320,000 when tax deferred, it can make a huge difference.

Two factors that are measurably important to creating wealth are rate of return and tax deferment.

If you have money in a qualified plan such as a 401(k), profit sharing or any of the many IRAs and other qualified plans, then you are on the road to tax deferment. If you are the owner of a Roth IRA or the new Roth 401(k), then wave your tax-free flag high.

Now we come to the hardpart--the rate of return. How would you like to average a16 percent rate of return (or greater) per year? With a senior settlement (SS), you can.

An SS is simply the purchase of an existing insurance policy from a senior citizen (who is 65 years old or older) by an investor. The selling senior, who no longer wants to pay premiums, gets a much larger price for the policy than the cash surrender value from the insurance company. The investor wins by making a large profit without risk (because the senior is sure to die).

How do you become such an investor? There is a public company, trading on the NASDAQ, that makes it easy. The average rate of return on SS investments is 16.36 percent per year and has been greater than 16 percent throughout the company's 14-year operating history.

You can become an SS investor in one of three ways: taxable, tax-deferred or tax-free. Let's examine these possibilities:

Taxable--This category includes your own funds or funds you control (such as corporation or other business entities, family limited partnerships or any non-charitable trust).

Tax-Deferred--Almost everyone can participate via their qualified plans (IRAs--traditional or roll-over, 401(k)s, profit-sharing and other qualified plans). The trustees of pension plans or other plans that are not self-directed can join the profitable fun by investing the plan funds in SS for the benefit of all participants.

Tax-Free--A Roth IRA or Roth 401(k) can fatten your tax-free accumulations. Charitable entities--charitable remainder and lead trusts and family foundations--are a perfect fit.

Because SS plans are probably new to many of you, here's a suggestion: Show this article to your professional advisors--CPA, lawyer, banker, financial planner and others. Discuss SS from at least two aspects concerning your investments (taxable and otherwise): 1) determine how an investment in SS compares to other possible investment choices, and 2) compare existing investments to your long-term and short-term goals.

Do you want more information about how you can earn an average 16.36 percent per year, without risk? Fax me your name, address, phone numbers for business, home, and cell, and include your estimated time to invest. Please note that the minimum investment amount is $50,000 for accredited investors

The easiest way to get rich!

Judging by their behavior, most people have an obsession with wealth. Politicians promise to create it, most popular magazines are filled with gossip about those who have it, and the average person spends much of their adult life trying to obtain it. We are creatures obsessed with money, partly for what it can buy, but also as a thing of value in itself.

But most people misunderstand money. They don't really know how to obtain it, or how to hold onto it once they have it.

If you're interested in getting rich, I'm going to give you the simplest formula for doing so. In fact, if you follow it you're virtually guaranteed to build enough wealth to get you into the top 5% of society. As the shampoo advertisement says: "It won't happen overnight, but it will happen".

The hardest way to get rich
Before I go into my formula, let me tell you about hard ways to get rich.

One of the hardest is to be born into it. Of course, if you happen to enter this world as a Hilton, a Gates or a Windsor, then life is sweet. But since 99.9999% of the population aren't that lucky, I'm assuming you didn't win that particular lottery.

And speaking of lotteries, gambling is another very difficult way to get rich. Sure, some people buy a lottery ticket and win big, but most don't. You can gamble your entire life and you'll most likely end up broke rather than wealthy.

When I was younger, I thought the easiest way to get rich was to become famous through some kind of creative act. Stephen King got rich writing horror novels, so why not me?

I'm now much wiser and realize that the vast majority of novelists never even get published. Of those who do, most wallow in obscurity. Only very few make it anywhere near the best-seller list, and only one in a million will achieve any kind of serious wealth.

The same fate awaits the majority of musicians, software company founders, sportspeople and website creator. For every Google that makes its owners billions, there are a million websites that lose money. Creativity is the most fun and rewarding way to get rich, but it's also a very difficult way.

The reason the media raves about and idolizes those who've built wealth through creativity is because they're so rare. You don't hear about the vast majority who wallow in obscurity and poor pay, because they're not interesting. "Young genius makes $1 billion from website" is a great headline "Ten thousand young geniuses make nothing from their hard work" isn't.

I'm not saying you shouldn't keep your dreams alive. It's one of the best parts of life. But this article isn't about the most fun way to try and get rich - it's about the easiest way.

Okay, here's the system.

Step 1: Get a well-paid job
This is a reasonable amount of work, and takes a few years, but it's a virtually guaranteed way to make a good income. If they're willing to put in the work, almost any intelligent person can get a job paying $100,000 or more within the space of a few years. While it's not easy, it is by far the easiest and most likely way to secure a good income. In fact, I've already written an entire article on how to get a job paying more than $100,000 a year for those who wish to pursue this avenue.

Step 2: Get good tax advice
However you make your money, your number one expense is likely to be funding the government. In most developed countries, the average worker pays around 30% of everything they earn straight into the taxman's pocket. If you've taken my job advice, you'll most likely pay even more than that.

While taxation is necessary to fund the good things governments provide, you don't do yourself any favors by paying more than your fair share. If you're serious about building wealth, get a good accountant who understands how to legally minimize your tax bill.

Step 3: Save 20% of everything you ever earn
As soon as you get paid, arrange to have 20% of your income removed into a savings account. Many banks can do this automatically for you. Keep your savings account separate from your spending account, and you'll barely miss this money.

There's a saying in economics "expenses rise to meet income". This means money that's easily available to you is certain to be spent. That's why most people's paychecks disappear before their next payday. They get used to having a certain amount to spend, and habitually run down their bank account.

Have your savings moved somewhere it's a hassle to get them out of to avoid this risk. Many high interest accounts require you to give them a few days notice, which is ideal for this purpose.

Step 4: Conservatively invest the funds that build up in your savings account
Once a month, go into your savings account and divide the money by investing it into the three core conservative assets: shares, property and cash. Open a mutual fund account for shares, a property fund for property, and a money market fund for cash. Look for share and property funds that invest in a broad range of assets and most importantly charge very low fees. An index fund is ideal for the shares. An index of property funds is ideal for property.

Put an equal amount into each account. This will diversify you against risk in any one particular asset. If you're younger, this rule is a little bit flexible, allowing you to take a little more risk and put more into shares and property if you like.

Step 5: Reinvest any income you get from your assets straight back into buying more assets
Mutual funds and property funds pay dividends. Money market accounts pay interest. Don't take this income into your spending account. Instead, select the option to have it reinvested into the fund that generated it.

Step 6: Never touch these funds and do your best to ignore them
The business press, like the mainstream press, loves a crisis. "Shares to skyrocket" or "Property to plummet" headlines will sell many more copies than "Things to continue steadily". All markets go up and down. Every day, some speculation will be published about some crisis or opportunity.

Ignore it all.

Just keep putting the 20% into your assets. Sometimes they'll go up and sometimes they'll go down in value. But over the long term, they'll almost certainly go up.

Step 7: Wait a decade
Do what I've outlined above and in a decade you'll be rich. Sure, you won't be Bill Gates, but you'll almost certainly be in the top 20% of wealth holders. Wait another decade and you'll be in the top 5% or higher.

That's the plan. It's not the most exciting or glamourous way to build wealth, but it's the easiest. Quite simply, this is how most rich people got there.

You too can join them, if you follow it.

5 easy steps to retire in 30s

1. Define the dream, while documenting the reality. How do you want to spend the rest of your life, post-retirement? Where do you want to live? What do you want to do? And most importantly of all, how much will it cost, year after year, for the rest of your life? This will tell you how much money you need to save and what kind of investments you're going to have to make in order to support your retirement lifestyle. Don't forget to include things like health insurance and the effect of inflation. Make a detailed spreadsheet to chart all these variables exactly.

2. Make a lot of money. Perhaps the quickest, high odds way to do this is by focusing on landing a high paying job. Consider the types of jobs that pay extraordinarily well in exchange for hard work, little psychological satisfaction, and a punishing lifestyle. After all, you're not choosing a career in the sense that most people are, seeking lifelong satisfaction, as you hope to be only in this job for a decade. Focus on jobs that will reward the fact that you are willing to work harder than anyone else. Some suggestions:

3.Investment banking - These Wall Street jobs can pay extremely well. In exchange, you sell your soul: the hours are a grind, the work is dull, and your boss is an egomaniac. But the goal is to get in, work hard and bank the money. Focus on delivering the results, and watch your peers melt away as they think "there's no way I can do this for 40 years" - you know you don't have to.

Sales (positions in high-ticket industries, such as many high-tech enterprise software companies) - Because your pay is directly linked to your sales, and your sales are in a large part proportional to how hard you are willing to work, you can earn a lot doing this dull job of sucking up to corporate IT drones.

Engineering - Software development, bio-tech, and other technical positions are high risk paths to wealth. Unlike the investment banking and sales which have high current income, many engineering jobs only hit the jackpot on chancy stock options. However, if you join early at the right startup, you might be be able to Buy a Private Island after 4 years of work. But more likely, you will grind away endless hours for an incompetent 27 year old CEO and his insatiable venture capital masters before the company goes belly up, leaving your options worthless.

Lower your expenses. The #1 reason people in high paying salaried jobs are still working hard when they are fifty is because they can't keep their spending under control. To soothe their agony regarding their dull, demanding job, they placate themselves with toys that fail to make them happy: a penthouse apartment, a fancy car, a diamond ring. Resist the massive pressure to dress, eat and shop like your peers, and live a modest lifestyle. Focus on work, as your play will come later. Some keys to not spending:

4. Buy or Rent a modest apartment/condo. You will be at work all the time, so do not splash out on housing. Clean and small will do just fine. Studies show that homeowners have 5x the net worth of rentors, so buy something well within your means as soon as it's financially feasable.

Don't eat fancy dinners. Unless you are a gourmet connoisseur, you have to admit that a $5 burrito tastes 90% as good as a fancy steak served on fine china.

Keep a budget. Track your expenses. Set goals for saving and celebrate when you meet them.

Invest wisely. It is beyond the scope of this how-to to explain exactly how to invest your money, but do the research and find a way to make your savings grow and work for you. The richest people invest in real estate and the stock market. Remember that the more you play it safe, the longer it'll probably take you to retire; on the flip side, the more you gamble, the more you risk losing your money and having to spend another year or more at your high-paying but miserable job.

5. Keep your eye on the mark. Not everyone is cut out for the kind of life you're going to have to lead in order to reach such an early retirement. There will be many times when you feel like giving in and throwing in the towel. Have a very clear vision and several ways to remind yourself why you're doing what you're doing, because you'll need them.