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Eight Steps to Seven Figures: The Investment Strategies of Everyday Millionaires and How You Can Become Wealthy Too
by Charles Carlson
Product Group: Book
Publisher: Doubleday Business (2000-03-14)
ISBN: 0385497318
EAN: 9780385497312
Dewy Decimal #: 332.6
Hardcover: 336 pages
Release Date: 2000-03-14
SKU: 20448
Condition: Used: Very Good
Comments: Hardback. Dust Jacket Condition: Very Good. All pages clean and free of marks.
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Editorial Reviews
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Amazon.com
We know some things about the millionaire next door--what kind of car he drives, how big his house is--but we don't know so much about how he built his wealth. In Eight Steps to Seven Figures, Carlson attempts to fill in the blanks by telling us the stories of 170 regular, middle-class folks who made millions by investing in the stock market. The steps he outlines are so simple that most people interested in investing already know them: Invest regularly, hang onto your investments for a long time (75 percent of the millionaires he surveyed held each investment an average of five years); use the tax code to your advantage by fully funding 401(k) plans and Roth IRAs. Step 4, "Swing for Singles," suggests investing in brand-name, blue-chip stocks when they look underpriced--something anyone who's ever heard of Warren Buffett can tell you. A couple other steps aren't quite so obvious. For example, Step 3 dictates that you buy only stocks and stock funds and forget about asset allocation. ("You get rich buying stocks. You stay rich buying bonds.") Step 8, "Limit Shocks to Your Finances," counsels you to keep your day job. (No day traders or Internet jackpoteers in this group.) This material could be dull as dirt, but Carlson keeps it lively. He reminds investors not to overestimate their genius during a bull market. He suggests that selling too late is better than selling too early, if you buy growth stocks and avoid cyclicals. "If you buy right, selling late may mean making 'only' a 300 percent profit instead of a 400 percent profit," he writes. What's most fun, though, is following the investment careers--the big hits and big mistakes--of the 170 investors. You read stories of selling Microsoft too soon, of not buying enough Dell when it was selling for $5 a share. But these people all ended up millionaires, and when you put this book down, you will almost certainly feel that you can, and probably should, be a member of their club. --Lou Schuler
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Product Description
In the tradition of the megabestseller The Millionaire Next Door, Eight Steps to Seven Figures brings together in-depth interviews with over two hundred everyday people whose investments have made them millionaires. But while The Millionaire Next Door describes its subjects' lifestyles and spending habits, Eight Steps to Seven Figures focuses squarely on the investing strategies and principles that ordinary people have used to achieve the magic million-dollar mark.
Bestselling author and chartered financial analyst (CFA) Charles Carlson reveals the keys used by the newly wealthy to reap extraordinary dividends, including a discussion of the specific stocks, bonds, and other financial vehicles they choose as part of their investment mix. In the course of the book, readers learn how to determine how much time they need to spend researching and watching over their portfolios, when to buy, and equally important, when to sell. From hundreds of accounts of those Carlson calls "Main Street millionaires," he distills eight specific investment rules anyone can follow to become financially worry-free. Among the lessons he outlines and elaborates on:
"Buy and Hold and Buy and Hold and Buy and Hold"--Harness the power of time in growing your portfolio and compounding your investment returns.
"Know Where You Are Going"--Determine your invest ment time frame, financial goals, and risk "comfort" level to put together a successful wealth-building strategy.
"Play to Your Strengths"--Everyone has different personality strengths, investment advantages, and specialized knowledge that they bring to the table; recognize and exploit them in achieving your financial goals.
One of the best things about Carlson's book is that it recognizes and allows for readers who may not have the resources to follow all eight rules. It offers reassurance and hope that there is more than one way to achieve the seven-figure pinnacle. Even people who started investing later in life, and can't fully harness the power of time, can find here the guidance they need to become wealthy.
Filled with the insights and investment advice that hundreds of everyday people have followed to become rich, and buttressed with countless you-are-there stories of how these millionaires did it, Eight Steps to Seven Figures is an absolute must for today's investors.
Bestselling author and chartered financial analyst (CFA) Charles Carlson reveals the keys used by the newly wealthy to reap extraordinary dividends, including a discussion of the specific stocks, bonds, and other financial vehicles they chose as part of their investment mix. In the course of the book, readers learn how much time they need to spend researching and watching over their portfolios, when to buy, and equally important, when to sell. From hundreds of accounts of those Carlson calls "Main Street millionaires," he distills eight specific investment rules anyone can follow to become financially worry-free.
One of the best things about Carlson's book is that it recognizes and allows for readers who may not have the resources to follow all eight rules. It offers reassurance and hope that there is more than one way to achieve the seven-figure pinnacle. Even people who started investing later in life and can't fully harness the power of time still can find the guidance they need to become wealthy.
Filled with the insights and investment advice that hundreds of everyday people have followed to become rich, and buttressed with countless you-are-there stories of how these millionaires did it, EIGHT STEPS TO SEVEN FIGURES is an absolute must for today's investors.-->
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Customer Reviews
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Great technique and inspiration
Rating  (4)
Date: 2008-04-01
1 out of 1 customers found this reveiw helpful
What does it take to be a millionaire when you retire? Less than you think. Certainly less than I thought.
Charles Carlson gives eight steps to achieve that goal:
1. Start investing right now. Every day you wait is lost money.
2. Establish a goal that matters to you. If possible, make it measurable so you can track your progress.
3. Buy only stocks and mutual funds. Forget about the rest.
4. Buy only high quality stocks that are leaders in their field or, if you know the area, you are sure will be leaders. Buy what you know and when you don't use no-load index funds.
5. Invest monthly, no matter how small. It adds up through compound interest and forces you to invest when the market is down. Diversify through time, not assets.
6. Buy and hold. Sell only when necessary. Never daytrade, which just makes your broker and government rich. Buying and holding makes you rich through better returns and tax reduction. And it's less stressful to boot.
7. Limit taxes as much as possible by taking advantage of tax breaks. Hold stocks for at least a year (though the longer the better) and put in the maximum legal contributions into your 401(k) and/or IRA, or as much as you can afford.
8. Live a stable and simple life. Limit shocks to your finances - don't divorce, don't job or house hop, don't get into debt, don't have ten kids, don't daytrade. Dare to be boring.
Sounds simple enough. Here's an example. If a 20 year old invests just $67 per month into a 401(k) (assuming 11% average annual return), he will have a million-dollar portfolio by age 65. That's less than $37,000 turned into $1,000,000, the magic of compound interest.
But the longer a person waits, the harder it gets. By age 30, the monthly requirement increases to $202 per month. By age 40, it's $629 per month. That's why the number one step is to start now, especially if you want to retire early.
If you want to be a millionaire, it isn't that hard. It just takes a willingness to contribute regularly to your retirement account and live on less than your income. That's something even I can do. And so can you.
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If True, It's Hope for the Hopeless
Rating  (5)
Date: 2006-05-07
3 out of 3 customers found this reveiw helpful
I regard Chuck Carlson as a trusted source of good, solid financial information. After all, this is the guy who gave us such investment classics as Buying Stocks without a Broker, The No-Load Stock Investor and Free Lunch on Wall Street. Thus, when he penned Eight Steps to Seven Figures, I had to get a copy and glean its secrets.
Now, one could say that his use of statistical data may well be an attempt to cover up the fact most of the material found in the book could be gleaned with a fair bit of old-fashioned horse-sense. However, for me, much of the information served to confirm what I have always suspected, but had precious little in the way of evidence to support. Carlson's use of statistical data to back up his claims does indeed make his book look impressive, and the statistician in me does have to take issue with a few things associated with his numbers, such as:
1) I can understand his reticence to disclose personal info on those sampled, but I found it odd that he did not disclose the sampling method (basically, how did he go about getting his sample? Most likely, it came from those who subscribe to his investment newsletter). Nor did he report the response rate to his survey.
2) He was not really consistent in the reporting of his results. In some cases, he reported averages, and in others, he reported medians, and in no cases did he report variations or present us with distributions associated with the various answers to questions.
3) He seeks to make the leap from his sample of millionaire investors to all investors like them, and from those individuals to the reader. However, without knowing something about the composition of his sample, we really can not infer anything useful in general which we may reasonably apply to ourselves, at least with any degree of certainty.
That is why I say that the contents of the book, if true, would mean renewed hope for the Hopeless (aka, the typical wage-earning, rent-paying, or if unlucky, mortgage paying, indebted schmuck).
Since I regard Chuck as a trusted source, I am willing to give him the benefit of the doubt; however, interested readers should take note of the following:
1) In reading the book, it sounded like most of the respondents are fairly well-to-do, and can be considered white-collar or managerial-class workers.
2) Most of them have been investing for at least twenty years, with their investment success coinciding precisely with the extended bull market lasting from 1980 to 2000. The bull market may have had more to do with their success than their investing acumen.
3) We really do not know what their total returns were (on a compound average basis) nor do we know what their asset breakdowns were, so we do not know the extent that IRAs and 401ks , the two critical pillars of Carlson's eight step approach, played in the respondents' investment success.
4) Most of them appeared to have had an intimate experience with poverty at some point in their lives, which they recalled vividly, and this experience spurred them to save frantically. This alone makes them atypical as compared to the general American public, who as a group have a negative savings rate.
Thus, although I really can not say how applicable the statistics in the book may be, I can say that the book contains many juicy, common-sense tips that anyone, be they white-collar or blue-collar, well-to-do or of modest means, male or female, can put to use. While you could glean the general ideas and the eight steps by reading solely the preface and introduction of the text, you would miss out on a lot of valuable insights and information.
I highly recommend the book to anyone looking to achieve or maintain financial safety and security.
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Interesting informations to learn about
Rating (5)
Date: 2006-02-19
1 out of 4 customers found this reveiw helpful
I love this book! I am learning things that I never knew before, and I started making life changes all ready!
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Simple Steps/Uncommon Wisdom
Rating (5)
Date: 2006-01-25
1 out of 1 customers found this reveiw helpful
The author early on states that his message is simple but uses this analogy: doing one situp is easy; doing one situp a day for the rest of your life however is easy and challenging at the same time.
The author admits the reader should not expect any get rich schemes or secret strategies for beating wall street. However the reason I rate this "simple minded" book 5 stars is because I've seen a lot of "knowledgeable" colleagues gloss over these steps and pay the price. I think even an experienced investor could benefit from reading through this every 2-3 years to refresh his sensibilities and directions.
Nevertheless I do agree w/ other reviewers who say that novice investors will benefit greatly; this book would be wonderful for a young teenager to introduce him to finances.
The main step is to invest early and reviews the benefits of compounding interest.
The second step regarding setting a goal is very important; and his recommendation to make it specific and tangible so as to avoid the temptations that can lead to emotional misdirections.
He does not give a lot of advice on the actual picking of stocks; his main idea is to pick a good growing company w/ growing earnings. I would have been interested in seeing more detailed examples of analysis but he does give some references to places where an investor can learn these skills. He lists as examples some of the millionaire's stock picks which include Lucent which has since tumbled! This should not disqualify this book as other reviewers have suggested.
At the time he wrote his book, Lucent was a growing stable company w/ good earnings. When a stock declines, he urges evaluation to see why it's declining; if it is a temporary/cyclical issue or one that is integral to the company's growth and earnings and base your decision to hold or sell on this.
He also discusses Dollar-Cost-Averaging and makes a convincing argument against trying to time the market or daytrade. He argues that stocks are better and perhaps even safer than bonds over the long run using 10 year statistical returns.
The discussion about 401 plans again is more geared towards novices; however I have seen experienced colleagues who insisted on daytrading; they did not want to jeopardize their retirement funds though so they did this w/ money outside of their IRAs, hence ended up paying some capital gains taxes and basically earned a lower return than their mutual funds! (note it was ironic that they didn't want to "jeopardize" their IRA but were happy to jeopardize other money!)
I hope to have given a fair description of the book and why people should read it.
Another book I found interesting is "The Intelligent Investor" and there's a line from there that says (parahrasing): In every tremendous upswing (or downswing) of the market it is amazing how investors have forgotten the lessons of the previous market movements while retaining their old prejudices.
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Great for beginners, explained simply, great returns
Rating (5)
Date: 2005-01-31
2 out of 4 customers found this reveiw helpful
I am a beginner investor and I have read many books and took courses on investing to no avail. When I got this book, it reminded me of all the simple lessons I had been told before, but ignored. That was to start investing now in a 401k, even small amounts instead of nothing and keep investing the same amount (dollar cost averaging)and leave it for 20-30yrs because stocks have shown to average 11% long term, which is the best investment overall.
After showing me how to choose a mutual fund, it gives step by step how and where to divide the percentages in a mutual fund. . After doing this in 2002, these were my results:
2002- -3% (while most people were losing up to 50%!)
2003-45%
2004-12%
I think that explains everything.
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