Millionaires in the Making

by Paul Keegan

John and Gina Rodrigues have always been good with numbers. John is a software engineer who manages a team at Microsoft, and Gina spent years processing mortgages at Wells Fargo and Countrywide Home Loans. But the numbers they are especially good at are the kind with dollar signs in front of them.

At age 27, John and Gina already earn a combined $174,000 a year, save half of what they make and have built a formidable portfolio of $380,000 in stocks, mutual funds and cash. Their goal: to become millionaires and retire by the time they turn 40, just 13 years from now.

To make that dream a reality, they have become black-belt practitioners of an art rarely practiced in America these days: While others with their earning power might indulge in fancy dinners, luxury vacations and designer wardrobes, the Rodrigueses live like young couples did before the era of easy credit. They rent the house where John grew up in the San Francisco Bay Area for a mere $650 a month; rarely travel; split an entrée on the rare occasions they eat out; and spend almost nothing on clothes (John wears free Microsoft T-shirts, while Gina gets hand-me-downs from her sister).

They are driven by a fierce determination to control their own fate. John yearns to quit his job to indulge his passion for the outdoors, and Gina plans to cut back her hours at the boutique they own to work with animals and, possibly, raise a family.

Can the couple do it? The outcome depends on the answers to three key questions: Will they be able to keep up their spartan lifestyle? (Anxious for a home of their own, they are now shopping for a house in one of the priciest areas of the country.) Will they invest wisely? (Among their goofs so far: They snatched up three properties near the height of the real estate bubble.) And even if they do, is 13 years really enough time to amass the huge sums required to retire at 40 - enough money to last them for the ensuing 50 to 60 years?

A Great Start

John learned the importance of saving early. When his father quit his job as a retail store manager to follow his dream of becoming a high school special-ed teacher, the family's income took a big hit. They squeaked by thanks to their rainy-day funds, but there wasn't much left for extras. When John, then 12, wanted the latest video-game system, his parents told him to earn it. So he raked leaves and mowed lawns for nine months until he'd scraped together the $150 he needed.

Later, when John saw his high school classmates tooling around in expensive cars, he worked long hours at a computer store so he could buy a used Honda Prelude. "I don't need my mom or dad to buy me a $60,000 Mercedes," he recalls thinking. "I can do it on my own."

John and Gina met at that computer store, where she was a cashier. They began dating and spent money like typical teenagers, going out to dinner and the movies, shopping at the mall. But starting in his sophomore year as an information systems major at the University of California at Santa Cruz, John had to pay his own tuition (his grandfather had paid for the first year). He saw a stark choice: take out loans like his friends or get a job and live frugally. He chose the latter, working 30 hours a week while packing his schedule with extra classes. "People said it was too hard; I wanted to prove them wrong," says John, who graduated with highest honors in just three years, free of debt.

Gina was slower to embrace John's money-saving ethic. Midway through college, as their relationship got serious, she revealed that she had $5,000 in credit-card debt. "I loved shopping," she remembers. "If I had a tough day, I'd go to the mall to make myself feel better." John was not pleased, but Gina devised a plan to dig out. Shortly after graduating, she got her real estate license and paid off the debt with the $9,000 commission she made selling her first home.

About a year after they began their careers - John at Microsoft, Gina at Wells Fargo - John proposed. But first he drove to Oregon (12 hours each way) to buy Gina's engagement ring, thereby avoiding $1,500 in California sales tax. They married in 2004 and moved into a two-bedroom condo in Dublin, Calif. that they bought for $377,000, putting down 5% of the price and financing the rest.

Within a year the condo had appreciated to $535,000. Tempted by their success, John and Gina decided to buy an investment property, settling on a $141,000 three-bedroom house in Phoenix, where friends had invested. They put down 10% and hired a property manager. Within 18 months the home's value had shot up to $240,000. They refinanced, taking out a $190,000 mortgage to free up cash for more properties. In late 2005 they bought two $150,000 homes near San Antonio with a 20% down payment.

Not that the Rodrigueses were relying on real estate alone to build their fortune. They were also saving furiously, putting 15% to 20% of their income in a mix of stock and cash investments. By the time they turned 24, when many of their peers were struggling with student loans and crushing credit-card bills, Gina and John already had nearly $70,000 set aside for retirement, plus their real estate equity.

Buckling Down

Then came a stumble, followed by an epiphany. John decided he could use tips from a financial adviser. After picking one he deemed astute and trustworthy, he bought a pair of variable life insurance policies at the planner's suggestion, only afterward looking at the fine print to find that the policies were loaded with fees and cancellation penalties. John stormed into the adviser's office demanding an explanation, then realized it was his own fault for not being more careful. "I was so angry that I didn't catch it," he says.

It wasn't just the $5,000 it cost to cancel the policies that had John steaming. His very identity - the financial whiz kid with a chip on his shoulder who could shut up those who doubted him in high school and college - was shaken. So he gave himself a crash course in finance, spending weekends with Gina poring over investment magazines and books. One day, he says, they hit upon a stunning realization about the power of compounding: "If we just push as hard as we can for another 10 years or so, there could be an explosion of financial growth at the end for us."

The Rodrigueses vowed to yank their belts even tighter. Like Tiger Woods restructuring his swing after winning the Masters a decade ago, they took their already phenomenal savings game to a new level. They sold their condo in late 2006, netting $110,000, and moved to John's childhood home, which they rented from his parents (his mom and dad had moved to a house nearby). They cut back on eating out to once a month, going to cheap chain restaurants and sharing a meal. They vowed to drive their cars until they died. Their clothes budget dropped to $300 a year.

Their new minimalist approach caused a few problems socially. Gina recalls awkward moments going out to eat with her family or friends when she would order only an appetizer and tap water and didn't think it was fair to split the check equally. John had to "respectfully decline" when buddies invited him to fly to Las Vegas for the weekend. "We're kind of boring," says Gina.

Their restricted lifestyle sometimes chafes, both admit. Living in John's boyhood home, furnished with his parents' stuff, is tough. "It's hard to see other couples living in their own houses the way they want," says Gina. And yes, she sometimes resents John's constant admonitions to save, save, save: "I'd say, 'We could die in a car crash tomorrow, so let's enjoy ourselves now!' " John, though, revels in his thriftiness: "I'm okay with people calling me cheap."

Over time they've learned to compromise. They eat out two or three times a month now and recently splurged on tickets to the show Jersey Boys (it was their anniversary). Gina convinced John to buy something he'd been craving for years - a $30,000 Subaru WRX STI to indulge his hobby of rallycross racing. And John has promised Gina they'll buy a home of their own as soon as they find a suitable one (they're looking in the $350,000-to-$450,000 range).

The Rodrigueses still manage to save more than half of their income, which is spread among different investments. John aggressively buys discounted Microsoft shares through an employee stock-purchase plan and contributes nearly the max to his 401(k). Additional savings go into a diversified mix of stock funds and cash accounts.

Bumps in the Road

But they have a long way to go before they're millionaires. And the Rodrigueses have run into a few snags that underscore how hard the path to wealth can be even for the most dedicated savers.

For one thing, owning real estate so far away has turned into a headache. Make that a migraine: One house stood empty for nine months because of a dispute with a former tenant, and their Phoenix property has dropped so sharply in value that they now owe nearly as much as the house is worth. Carrying costs for the properties exceed the rental income they generate by $9,000 a year. Given the downturn in real estate prices, if they sold all three homes today, they'd barely break even.

The Rodrigueses have also seen how a blip in their careers can undermine their saving efforts, even temporarily. Last year Gina quit the mortgage underwriting business - the hours were too long, she says, and the work wasn't creative enough. During the year she was out of work, the amount the couple were saving dropped by 20%. Then, earlier this year, Gina found a boutique called La Lavande, which sells imported soaps and handbags, for sale in nearby Walnut Creek. The Rodrigueses took out a $75,000 loan to buy the store - and Gina had found her calling.

Eventually, though, the Rodrigueses both hope to stop working altogether. Their plan is to move away from the Bay Area to a less expensive locale like Arizona by age 40. They want to buy a ranch where outdoorsman John can go hiking and camping while Gina starts a small farm, raising sheep and chickens and maybe a family. "I'd like a really simple life where John and I can just spend more time together," says Gina.

The Advice

Money asked California financial planners Eric Toya of Redondo Beach and Mike Chamberlain of Santa Cruz to assess the Rodrigueses' chances of retiring by 40 and recommend steps to help them reach that goal. Their suggestions:

Rethink that exit date. If John and Gina maintain their current rate of saving, they'll build an impressive nest egg over the next 13 years. Assuming they get raises of 4% annually and their portfolio averages gains of 6% a year, Toya estimates they'll have $2.9 million at age 40. Combined with the income they might earn from any ventures they pursue in retirement (John's thinking about buying more investment properties or starting a small business), that might be enough to last them the following 50 to 60 years.

Toya, however, stresses that making projections for such a long period is inherently risky because the unknowns are so great: What path will their careers take? Will either one develop a health problem? Might the financial markets go through a protracted downturn? To compensate for those risks, Toya says, "the younger you retire, the more conservative your withdrawal rate should be." But even if the Rodrigueses draw down their portfolio at a 3% rate vs. the 4% typically recommended for retirees, they'll run out of money before age 80.

What to do? Delaying retirement by just five years will greatly increase the chances that their money will last their lifetime, Toya says. When they're 45, their portfolio will be worth $4.75 million, according to his calculations. They could tap their savings at an even lower 2.5% annual rate - giving them an extra cushion for bad market years and big expenses like raising kids and paying for college - and they'll still likely have enough to live comfortably to age 100.

Dump the company stock. The Rodrigueses have 37% of their portfolio in Microsoft. That's far too much in a single stock, especially since they're also dependent on the company for most of their income. Chamberlain advises selling the shares in increments every two weeks or so to get the stock down to 5% of their portfolio.

John strongly disagrees. "Frankly, I think it's dumb to sell low," he says. "I think it's a safe investment to hold until the market comes up." Replies Chamberlain: "I don't care what the stock is: To diminish risk, you need more diversification in your portfolio."

Add a few bonds. Gina and John scored off the charts for risk tolerance in a questionnaire Chamberlain gave them. But even for fearless investors, having 99% of a 401(k) in stocks and just 1% in fixed-income assets is too aggressive, warns Chamberlain, who suggests a 90/10 split. Best bet: intermediate-term bonds, which historically have returned about 5% a year.


Consider a real estate sale. The Rodrigueses are losing about $750 a month on their three investment properties. If they sell one or two of the homes now, they can stop the bleeding and probably break even on their purchase. If they're forced to sell later on and the market is still in a free fall, they stand to lose a lot more money.

But John is adamantly against a sale, an odd position for a man who splits entrées at a restaurant to save a few bucks. Chamberlain believes John has developed an emotional attachment to the properties - or he may simply be unwilling to admit that they made a mistake. John counters: "I think those properties are going to come back eventually. Even if they don't, our retirement plan is not based on any return from those properties anyway."

After meeting with Chamberlain, John and Gina are relieved to know they're on the right track. They do understand that life is uncertain - that John could lose his job and that investment returns could keep shrinking. If that happens, they say, they're prepared to work past 40 and retire later.

But John remains optimistic about their chances of reaching their goal. "I get tired of the naysayers around me," he says. "Sure, it gets lonely sometimes, but look, I have a beautiful wife, I'm happy, I've got good friends...." He pauses, as though hearing a cash register ringing. "Well, I don't need a hundred friends. That usually means a hundred gifts a year."

For President

Ivy Leaguers' Big Edge: Starting Pay

by Sarah E. Needleman

Where people go to college can make a big difference in starting pay, and that difference is largely sustained into midcareer, according to a large study of global compensation.

In the yearlong effort, PayScale Inc., an online provider of global compensation data, surveyed 1.2 million bachelor's degree graduates with a minimum of 10 years of work experience (with a median of 15.5 years). The subjects hailed from more than 300U.S. schools ranging from state institutions to the Ivy League, and their incomes show that the subject you major in can have little to do with your long-term earning power. PayScale excluded survey respondents who reported having advanced degrees, including M.B.A.s, M.D.s and J.D.s.

Even though graduates from all types of schools increase their earnings throughout their careers, their incomes grow at almost the same rate, according to the survey. For instance, the median starting salary for Ivy Leaguers is 32% higher than that of liberal-arts college graduates -- and at 10 or more years into graduates' working lives, the spread is 34%, according to the survey.

One reason why Ivy Leaguers outpace their peers may be that they tend to choose roles where they're either managing or providing advice, says David Wise, a senior consultant at Hay Group Inc., a global management-consulting firm based in Philadelphia. By contrast, state-school graduates gravitate toward individual contributor and support roles. "Ivy Leaguers probably position themselves better for job opportunities that provide them with significant upside," says Mr. Wise, adding that this is the first survey he's seen that correlates school choice to a point later in a career.

Also, more Ivy League graduates go into finance roles than graduates of other schools, and employers pay a premium for them, says Peter Cappelli, a professor of management and director of the Center for Human Resources at the Wharton School of the University of Pennsylvania. "Dartmouth kids get paid more for the same job than kids from Rutgers are [doing]," he says.

Which school pays off the most? According to the survey, graduates of Dartmouth College, an Ivy League college, earn the highest median salary -- $134,000.

Of all Ivy League graduates surveyed, those from Columbia earn the lowest midcareer median salary -- $107,000. Meanwhile, the highest-paid liberal-arts-school graduates, from Bucknell University, earn slightly more -- $110,000.

Mr. Wise called the data thought-provoking. "These results, to some extent, confirm suspicions that many people have about the importance of a person's college choice in giving them better pay opportunities down the line," says Mr. Wise. "What we still don't know is whether or not it's the training or education the school provides that drives these pay differences, or if the people from those schools are just wired to self-select into jobs that are likely to be paid more."

The survey also looked at how much salaries increased over time. Liberal-arts-school graduates see their median total compensation grow by 95% after about 10 years, to $89,379 from $45,747. Meanwhile, graduates of "party schools" (as defined by the 2008 Princeton Review College Guide) aren't that far behind, with their incomes increasing 85% during that time to $84,685 from $45,715.

At the bottom: Engineering-school grads, who earn the highest starting salaries, yet see their paychecks expand just 76% by their career midpoints to $103,842 from $59,058.

Contrary to what many parents tell their children majoring in subjects like political science or philosophy, these degrees won't necessarily leave you in the poorhouse. It can depend on what career path you choose to pursue with that degree. History-majors-turned-business-consultants earn a median total compensation of $104,000, similar to their counterparts who pursued a business major like economics -- whose grads earn about $98,000 overall at midcareer, the PayScale study shows.

English majors in all career paths who graduate from Harvard University earn a median starting salary of $44,500, compared with $35,000 for those with English degrees from Ohio State University -- a 27% difference. And that disparity widens even more after 10 years. By then, English majors from Harvard reported earning $103,000 in median pay, 111% more than their counterparts from Ohio State.

"With a liberal art's degree, it's what you make of it," says Al Lee, director of qualitative analysis at PayScale. "If you're motivated by income, then there are certainly careers in psychology that pay as well as careers out of engineering."

Bullet Art

Numb What?

10 Secrets of Breakthrough Companies

by Keith McFarland

Why do some companies "break through" while so many others do not? Author and business consultant Keith McFarland has spent years researching thousands of private companies in an attempt to answer that very question. After studying the performance of more than 7,000 companies that have appeared on the Inc. 500 list of America's fastest-growing private companies, McFarland, a former Inc. 500 CEO himself, wrote the best-selling book The Breakthrough Company: How Everyday Companies Become Extraordinary Performers. Here are 10 secrets to long-term entrepreneurial growth:

1. The sexiest businesses don't always win.

In fact, the most interesting companies often don't operate in the markets that Wall Street and the business press consider interesting or "cool." Many of the breakthrough companies began in market segments experts considered unattractive at the time. We certainly didn't expect to find a nuts-and-bolts distributor, a snowmobile maker, a payroll processor, or even a niche real estate business on our list of top performing growth companies. But we did.

2. It's not all about the entrepreneur.

They're the ones that grab the headlines, right? And in fact, in the earliest stages of development, the quality of the entrepreneurial team tends to swamp all the other variables in predicting firm success. But as soon as the business gets on its feet, the best entrepreneurial leaders are too smart to let the company make it "all about them." Breakthrough leaders understand that no one wants to serve a king. These leaders work hard to put the company's vision -- and not their own personality -- at the center of things.

3. Entrepreneurs aren't always risk takers.

Over a five-year period, we administered a psychological inventory to more than 4,000 entrepreneurial leaders. We discovered that contrary to conventional wisdom, entrepreneurs are actually distributed evenly across the risk-taking spectrum. Even more important, there is evidence that as they achieve success, some entrepreneurs actually become more risk averse -- "playing tight" (as they say in poker) at the very time when they should be upping the ante.

4. Founders don't need to let go.

Conventional wisdom holds that entrepreneurial companies fail to reach their full potential because founders just won't "let go." So we were surprised to learn that in eight of nine top-performing companies in our study founders stayed deeply involved -- usually for decades. It turns out that, rather than letting go, founders and founding teams need to redefine their roles as the business grows.

5. You don't necessarily have to stick to your knitting.

Sticking to your knitting is fine, as long as your competitors stick to theirs as well. But competitors rarely behave the way you want them to. To achieve breakthrough performance, companies need to be constantly scanning the changing needs of the customer and developments in the industry so they can spot the most important opportunities to advance the business.

6. You don't need OPM (other people's money).

We've all heard the professional investor's pitch: "Sure you can grow your business on your own, but you can grow it faster with our money." So we were surprised by the fact that not one of the breakthrough companies were funded by venture capital in their start-up years -- not even several high-tech ventures (one company accepted venture money just before going public because the founder wanted some sharp VCs on his board, not because he needed the money). The right investor at the right time can be crucial, but outside money is far from a requirement.

7. It's not all about hiring the right people.

So much has been written about the importance of hiring the "right people" that we expected the top-performing Inc. 500 companies to have some really innovative techniques for attracting the best and the brightest in the industry. Instead, we found that these companies focus more on making the people already in the company productive through intense training and education. In the words of one breakthrough CEO, we have succeeded because we have built a place where ordinary people can do extraordinary things."

8. It doesn't matter where you went to school.

In our study of the top performing Inc. 500 companies over a 22-year period, we found that it's not about where (or even whether) you went to school. One company was run by a Ph.D in statistics and former college professor; another was run by a person who hit the bricks right out of high school.

9. You don't have to let the MBAs take over.

Many business people divide the world into two groups -- entrepreneurial firms and "professionally managed" firms. But reality is not that simple. Many small firms are very well managed -- though probably not in a way that most bureaucrats in giant companies would recognize. And in many big companies, it is easy for the "professional management" tail to start wagging the company dog. Companies large and small alike should strive to create an entrepreneurial enterprise that combines the quickness and customer focus of an entrepreneurial firm with the systems and processes of a more mature organization. MBAs are optional.

10. Strategy isn't just the job of the CEO.

The most successful companies recognize that strategy is a firm's "source code" -- the fundamental set of assumptions upon which everything else in the business is based. So they strive to get people throughout the organization thinking about and debating strategy. They nurture an environment that includes "insultants" -- people willing to take a full swing at the issues, even if it means questioning the fundamental assumptions upon which the firm is based.

Ways to Make Saving a Habit

by Andrea Coombes

What's your excuse? When it comes to the sorry state of our finances, we've all got one.
Maybe your raise at work never materialized, or you charged that unexpected car-repair bill -- or that plasma TV -- to your credit card. Whatever the reason, for many of us, personal balance sheets could look better. Half of U.S. workers report less than $25,000 in savings.
Even if you've saved more, is it enough to sustain you through a decades-long retirement?
Sure, plenty of consumers now are easing back on spending, thanks to sticker shock at the grocery store and gas station. But soon enough retailers and restaurants will be pushing hard-to-resist "recession deals" -- will you be able to restrain yourself? And, what happens to your budget-minded ways when the economy recovers?
It's time to shake off the "consumer" mantle that politicians and economists are so happy to drape around our shoulders. Resist their calls for consumers to save the economy, and resist the advertisements enveloping us in the idea that we need more and more things.
The only thing most of us need more of is financial security. A lot more.
How to get there? Think thrift. For some, it's a familiar idea. For others, thrift implies denial and deprivation, and that makes for a tough call-to-arms.
So, how to save money without scrimping, be thrifty without feeling miserly -- and maintain those habits after our economy picks up speed?
It won't be easy. Expect discomfort, says Kathleen Gurney, a psychologist and chief executive of Financial Psychology Corp. Keep going, even when it's uncomfortable -- the rewards are worth it, and once this economic slowdown ends, you'll have financial habits in place to support you for a lifetime.

1. Spend less time feeling poor. Flipping through catalogs and going to the mall will make you feel like you need things, Ms. Gurney notes. Sure, you can afford some of that stuff, but the main message is: Most of this is out of your reach. Instead, do things that offer a sense of well-being. Invite friends over. Walk in the park.
2. Retrain your brain. Depriving ourselves of current pleasure is nigh impossible if we're not driven by a sense that the future will be more fulfilling, says Ms. Gurney. When you start to feel that "I'm deserving so I'm buying" feeling, visualize a smaller credit-card bill or higher savings-account balance.
3. Look around you. Are you happy with what your hard-earned dollars bought? If not, shift your spending to those things that bring greater long-term satisfaction, including retirement savings.
4. Choose your extravagances. Here's mine: I eat out about once a week. An extravagance I do without: Cable television.
5. Assess weaknesses. "If you were thrifty, how would you look different?" says Gary Buffone, a financial psychologist in Jacksonville, Fla. Identify what you want to change; then shoot for specific targets, such as a six-month hold on buying new tech gadgets.
6. Make trade-offs. Substitute small, free pleasures for those that cost. Have a movie night at home with friends -- you'd be surprised how many people are equally eager to cut costs.
7. Set goals. Meet weekly with family to discuss the spending plan (don't call it a budget) for the months and years ahead. This may involve tough choices, such as forsaking a family vacation. But think of the guilt-free trip you can take after saving the necessary cash. Good memories last longer, Ms. Gurney notes, when not trammeled by large credit-card bills.
8. Resist your children. They're going to find it hard to change their expectations. How can you help? Stand firm. The next time they clamor for the latest videogame, remind them of the bigger prize (that family vacation), and tell them their choices here and now are, say, a picnic or a movie rental. Offer options, but don't give in to their push for more consumer goods.
9. Enlist other people. Many people are reticent to talk about money worries, but almost everyone has them, so open up and tap your allies. Hold a contest with friends to see who can save the most in a month, or agree with your spouse to talk before spending more than $100, Mr. Buffone suggests.
10. Post it. Remind yourself by putting post-it notes on your wallet, mirror or steering wheel with the mantra of your choosing: "I want to go to Hawaii in January." "I want to pay off credit-card debt."
11. Automate it. Divert money monthly from your checking account to savings. It will force you to budget, based on what's left in your checking account.
12. Rethink rewards. What are some of your happiest memories? Those are the true rewards. Next time you're about to buy something because you deserve it, ask yourself whether there isn't something you deserve more, such as time at home cooking with your teenager, or a stroll with your husband or best friend.
"We've been conditioned to think that spending the money on clothes, at a restaurant, is going to be the reward," Ms. Gurney says. "But what is the ultimate reward that we want from working hard, in the end?"

Making money, not inheriting it, creates more financial security

by Thomas Kostigen

Most wealthy people earn their money, and because they earned it they feel more secure about keeping it. That's what a new survey reveals about wealth and values.

PNC Wealth Management conducted the survey of people with more than $500,000 of investable assets. The Wealth and Values Survey showed that 69% of "wealthy" Americans accumulated most of their money through work, business ownership or investments; 6% percent received money through inheritance; and 25% gained wealth through a combination of inheritance and earnings.
"An overwhelming number of affluent Americans earned their wealth and are more likely to feel secure during challenging economic times compared to peers who inherited their money," according to PNC.
These findings mirror most other studies of the wealthy and how they got rich. Indeed, take a look at the Forbes list of the world's richest people and you won't find many at the top spots who inherited their riches. This value set speaks volumes about making money, as well as about the prospects of losing it.
A couple of things separate the earners from the inheritors: First, earners were in control of making their money, and therefore feel more confident about preserving it or making even more. Second, earners likely took large risks to achieve wealth. As we all know, as risk increases, so does return. Accordingly, earners are likely more comfortable with the concept of risk.

Keep What You Make

Earners are more likely to be concerned about an economic recession, and more confident they can manage through a downturn. When asked about a recession, 36% of earners said it was a concern, yet 77% agreed with the statement "I feel I have a lot of control over my financial future."
Meanwhile, 27% of heirs expressed concern about recession, but 67% expressed confidence about control of their financial futures, PNC found.
Driving the point of risk tolerance home, the report says earners also have a higher risk tolerance than heirs: 39% of earners rate themselves as moderate to risky investors compared with 21% of heirs.
"There is a strong correlation between those who earned their wealth, their willingness to take risks and confidence that they can recover from a major negative financial event," says Thomas Melcher, executive vice president and managing director of Hawthorn, PNC Wealth Management's division that services ultra-wealthy clients.
"Those who inherited their wealth often view themselves as stewards for future generations," he adds. "As a result, they tend to be more conservative in their approach to investing."

Other Survey Findings Include:

Happiness is relative: Three-quarters of earners agree with the statement: "My financial success lets me feel less stress and worry," versus 50% of heirs. Meanwhile, 51% of earners agree with the statement: "As I have accumulated more money in my life I have become happier," compared to 33% of heirs.
More is not necessarily merrier: Heirs are more than twice as likely to say "Having a lot of money brings about more problems than it solves."
As luck would have it: More people who have earned their wealth (37%) agree with the statement: "The money I have made so far has come from being in the right place at the right time" compared with 25% of heirs.
Passing it on: Far more of earners agree with the statement: "Every generation should be responsible for creating its own wealth." And more earners believe that "It is more important for children to learn the value of money through hard work."
Which also seems to be a good lesson for adults.

One Minute Golf Lesson

Should I Stay Or Should I Go

Tahoe Trip

Plantar Fasciitis

Do your first few steps out of bed in the morning cause severe pain in your heel? Or does your heel hurt after jogging or playing tennis?

Most commonly, heel pain is caused by inflammation of the plantar fascia — the tissue along the bottom of your foot that connects your heel bone to your toes. The condition is called plantar fasciitis (PLAN-tur fas-e-I-tis).

Plantar fasciitis causes stabbing or burning pain that's usually worse in the morning because the fascia tightens (contracts) overnight. Once your foot limbers up, the pain of plantar fasciitis normally decreases, but it may return after long periods of standing or after getting up from a seated position.

Plantar fasciitis usually develops gradually, but it can come on suddenly and be severe. And although it can affect both feet, it more often occurs in only one foot at a time. Watch for:

• Sharp pain in the inside part of the bottom of your heel, which may feel like a knife sticking in the bottom of your foot
• Heel pain that tends to be worse with the first few steps after awakening, when climbing stairs or when standing on tiptoe
• Heel pain after long periods of standing or after getting up from a seated position
• Heel pain after, but not usually during, exercise
• Mild swelling in your heel

Conservative treatment

For most people, the condition improves within a year of beginning conservative treatment. Nonsurgical treatments that may promote healing include:

• Night splints. Your doctor may recommend wearing a splint fitted to your calf and foot while you sleep. This holds the plantar fascia and Achilles tendon in a lengthened position overnight so that they can be stretched more effectively.
• Orthotics. Your doctor may prescribe off-the-shelf or custom-fitted arch supports (orthotics) to help distribute pressure to your feet more evenly.
• Physical therapy. A physical therapist can instruct you in a series of exercises to stretch the plantar fascia and Achilles tendon and to strengthen lower leg muscles, which stabilize your ankle and heel. A therapist may also teach you to apply athletic taping to support the bottom of your foot.
  

Medications and procedures

If conservative treatment doesn't provide relief, you might consider:

• Corticosteroids. When other treatments don't work, your doctor may suggest one or two injections of corticosteroid medication into the region of the plantar fascia attachment at the heel for temporary relief. Multiple injections aren't recommended because they can weaken your plantar fascia and possibly cause it to rupture, as well as shrink the fat pad covering your heel bone. Another method for delivering corticosteroid medication is a technique known as iontophoresis (i-on-to-fuh-RE-sis), which uses gentle electric current to draw the medicine into the area of discomfort.
• Extracorporeal shock wave therapy. In this procedure, sound waves are directed at the area of heel pain to stimulate healing. It's usually used for chronic plantar fasciitis that hasn't responded to more conservative treatments. Early studies on this procedure reported positive results, but some recent studies have had limited success in treating plantar fasciitis. More research may determine if extracorporeal shock wave therapy is an effective treatment for heel pain, and if so, what kind of machine and treatment regimen seems to work best.
  Complications of this procedure may include bruising of your skin, swelling, pain, numbness or tingling, and rupture of the plantar fascia. This therapy isn't used for children, pregnant women or people with a history of bleeding problems.
• Surgery. Only a small percentage of people need surgery to detach the plantar fascia from the heel bone (plantar fasciotomy). It's generally an option only when the pain is severe and all else fails. Side effects include a weakening of the arch in your foot.

Frozen Grand Central

6 Blunders That Ruin Retirement Plans

By Katy Marquardt

Regular contributions to an IRA or 401(k) are a good start, but accumulating money is only part of the retirement-planning equation. Securing a comfortable retirement is a tricky process that requires careful planning; a few bad moves can cost you dearly in the long run. Here are six common missteps:
1. Not having a plan: A third of adults have no financial plan for retirement, according to a recent survey conducted for TD Ameritrade. Of the remainder of those surveyed, 46 percent said they have a written retirement plan, and 20 percent said they have a plan in their head. "So many people who have undersaved choose to ignore the issue rather than sit down and create a plan," says Joe Heider, president of Dawson Wealth Management in Cleveland. "It's almost like a fear of going to the doctor."
Retirement calculators are a start. Free counsel might be available through your employer's investment-advice program; otherwise, an investment adviser can help you plot your financial moves. Services range from a one-time financial checkup to a comprehensive plan that includes asset allocation and estate planning.
2. Underestimating life expectancy: Retirees are living longer these days, thanks to more healthful lifestyles, medical breakthroughs, and healthcare reforms. In 1955, Americans lived to be an average of 69.6 years old. The average life expectancy rose to 75.8 years by 1995 and to 77.9 years by 2005, according to the National Center for Health Statistics. Keep in mind that life expectancies are averages; many of today's retirees will live well into their 80s and beyond. Rosanne Grande of R. W. Rogé & Co. on New York's Long Island says her firm's plans run to age 100. "We invest for the long term, not the short term, now that people are living 30 and 40 years into retirement," Grande says.
One side note: As retirees' expectations about longevity increase, so does the role of the financial adviser. Grande is one of a growing number of registered financial gerontologists, who specialize in serving older clients.
3. Low-balling your spending: Would-be retirees tend to be too conservative when projecting their annual expenses in retirement, Heider says. "Chances are, a couple retiring in their early to mid-60s is going to spend almost as much in retirement as they did during their working career," he says. Spending in some categories, like travel, may increase. "For most people, spending on discretionary items and travel actually goes up in the early years of retirement," Heider adds.
4. Failing to plan for unexpected extras: Many people have a basic retirement plan in their head, with a general idea of their assets, monthly expenses, pension income, or Social Security income, Grande says. "But what they fail to factor in is extraordinary cash-flow needs, such as boomerang children living at home or extended care for aging parents," she says. A leaky roof or termite infestation could also put a dent in your budget. For such surprise expenses, Grande recommends building a little extra padding into your plan. Think of it as an extended emergency fund.
5. Overlooking rising healthcare costs: A 65-year-old couple retiring this year will need about $225,000 just to cover medical costs in retirement, according to Fidelity Investments. This figure, which assumes retirees don't have employer-sponsored healthcare coverage, represents a 5 percent increase over 2007 and a whopping 41 percent jump from 2002. Meanwhile, the number of large employers offering retiree health benefits is falling.
Employers are also increasingly shifting more costs to retirees through higher premium contributions and cost-sharing requirements. "It's scary, and it's very hard for most people to realize that the cost of the medical plan is going to go up 8 to 12 percent each year," says Ellen Jordan, senior vice president with Bryn Mawr Trust Wealth Management in Bryn Mawr, Pa.
6. Ignoring inflation: Don't underestimate the impact inflation will have on your retirement plan. If you're 65 today, an expense that currently costs $100 will cost $180 by the time you're 80, assuming an inflation rate of 4 percent. Plan your retirement with the assumption that the cost of living in your later years will considerably outpace that of your earlier years. Grande uses a 4 percent inflation estimate in her clients' plans.

Golf Swing

Maximize Your Long-Term Salary Growth

If you're happy with your current salary, it would be easy to just sit back and enjoy it. But if you want to make sure your earnings keep rising over the long term, you need a strategy to protect against salary plateaus and unemployment.

Experts offer the following tips for maximizing your earnings over the course of your career.
* Watch industry trends carefully.

"If your professional area is vulnerable to economic shifts, don't cling to it just because it is familiar and comfortable," said Libby Pannwitt, principal of the Work Life Design Group, in San Carlos, California. Take a class or even get an advanced degree to arm yourself with skills that are more enduring.

For example, Marianne Adoradio, a recruiter and career counselor in Silicon Valley, said she sees otherwise excellent candidates for human resources positions who don't have global experience -- something that is a requirement for more and more positions. She advises people in the field -- even if they aren't currently job-hunting -- to make sure they're working on projects with a global component. If they aren't, they need to ask their boss how they can gain this experience.

* If you reach a salary plateau, understand the reason.

In many fields, people start out their careers with a succession of rapid salary increases. These increases taper off after a time, though, unless they enter management. Some companies have career paths for non-managers with highly specialized skills, so if you're not interested in management, you may want to pursue one of those.

If the problem is that your field of expertise is no longer in as much demand as it used to be, then you may need to look at a move to a related field.

* Make yourself marketable outside your company as well as inside.

"The most successful people develop themselves to add a lot of value to any company in the industry, not just their company alone," said Steve Levin, principal of Leading Change Consulting & Coaching, in Portola Valley, California. This will give you more leverage in internal negotiations -- and more options if you decide to leave your current company.

One tip for being marketable across an industry: Try to work for "name-brand companies," Adoradio said. Recruiters often prefer candidates who have worked for industry-leading companies. Having one on your resume will help your long-term career prospects.

* Consider multiple income streams.

Some people branch out from their main job to take on consulting work or teach a course in their field. This may help advance your primary career if the work helps you stay current or showcases your expertise. If your second job is in a different field, the second income will increase your earnings and help shield you from the downturns in your main industry.

* Don't focus too narrowly on money.

"Raises and promotions are given to people who generate trust and demonstrate competence to handle more complexity," Levin said. Focus on this, and the money will likely follow.

And remember that learning new skills in a job can be just as important as the money.

"When that learning stops, when that development stops, it's time to move," said Leslie G. Griffen, managing partner of Career Management Associates, in Overland Park, Kansas.

Five Practical Moves to Help You Outrun Inflation

by Jennifer Openshaw

Rising health-care and education costs have topped the headlines for years. We're getting used to paying more at the pump. But recent figures show rising prices hitting closer to home. Higher commodity costs are driving prices for food, clothing and other basic necessities.

Sure, we've gotten our breaks. Electronics have been getting cheaper for years. The China effect has held prices steady for lots of manufactured goods, including clothing. And the housing market -- well, you could say that housing is getting cheaper, but that only helps those lucky few in the market today.

Inflation happens slowly -- an increase here, and increase there, and suddenly your finances fall behind the curve. If you spend $50,000 a year excluding housing payments, a 4% annual inflation rate suggests your expenses will rise by some $2,000.

Your income may keep up, but it's hard to count on that. I say it's time to aim high -- to figure out how to save at least $1,000 this year. Not to pay down debt, put in savings or improve our lifestyles -- but to stay ahead of the inflation monster.

Five ways to save a grand:

The following five practical suggestions can save $1,000 apiece:

1. Don't "obey your thirst." At least, not all the time. The cost of beverages, in all forms, adds up. Wine, soda, beer, even bottled water are expensive at home, not to mention at restaurants. Order drinks with free refills, or drink ice water. At home, try a filtered water pitcher or learn to drink juices, especially from concentrate. One friend of mine quaffed two 12-packs of soda a week -- $12 or so considering redemption values -- and quit when his kids started to follow suit. He switched to lime juice with great success. Without much sacrifice, I think you can save $20 a week on beverages -- at home, at restaurants, or some combination of the two. I can hardly think of an easier way to save a grand.
2. Put your cars in "econo-drive." Energy prices send no clearer message than it's time to cut back on driving. Put differently: gas prices are part of the problem, but how much we drive is usually the other problem. Learn how to combine trips and think of alternatives to trips, like putting kids on school busses instead of driving them to school (which will train them to ride the bus too). Or challenge yourself and your family to make one day a week car-free. Save 2,000 miles a year -- which isn't so much for an average family driving 25,000-30,000 miles. I think the IRS reimbursement of 50.5 cents/mile is pretty close to actual cost, so that'll save the $1,000. And your cars will last longer.
3. Thrift-shop for those threads. According to the latest Bureau of Labor Statistics inflation report, overall apparel costs rose for the first time since 1998. What do you do? Naturally, buying fewer clothes and shopping for enduring value is part of it. But consignment and thrift shops are great places to get good stuff, even fancy designer names. Lately, consignment stores have acquired new stock as people turn their extras into a little cash. It's fun. A friend of mine checks out the consignment stores when she travels -- it gives her more to choose from and something to do.
4. Do you own work. That is, the housework, indoor or outdoor. Mow your own lawn and save maybe $40 to $60 a month. It's good exercise, too. Learn to paint walls or cut hair. I mean, don't get silly -- if you can't iron a shirt, don't iron shirts. If you can't reach the drain plug, don't change your oil. But I bet you can find at least a couple of things you can do yourself, and it's a satisfying feeling.
5. Suspend services you don't need. Seems obvious, but I bet you have a few you've forgotten about or are hanging on to for obscure just-in-case reasons. Still have that old dial-up account? How about the "premium" cable or satellite package? Or those "hot" domain names they keep asking you to renew. Do you really need them still? Could that pest control be done every other month instead of monthly?
Some perspective
The point isn't to turn into a miserable miser -- the point is to prepare for the inevitable. Good financial management implies always planning ahead.
And if today's inflationary monster turns out to be more growl than bite, or if your income keeps up with inflation on its own, so much the better. You'll have $1,000 extra to spend on something you want -- or to prepare for the next financial storm. Either way, it's a good thing.

Spring cleaning for gadgets

In addition to doing those other things you ought to take care of twice a year (like changing your toothbrush and replacing your furnace air filter), spring is a good time to clean your gadgets and computers to ensure they keep running well and looking good.

It doesn't have to take hours and hours. Here are some tips for cleaning your gear efficiently.
Blast it outAnything you can physically open (primarily your desktop PCs) should be cleared of dust. Unplug your computer, remove the case, and take it outside. Get a can of compressed air and blow out all the dust bunnies, paying special attention to any fans in the case. Use quick, short bursts to avoid condensation.

Cleaning your laptop is especially important, as laptops have far less room for airflow and can overheat if they aren't kept free from dust. Use the compressed air's straw attachment to blow out the laptop's vents. Use it on your keyboard as well, to keep crumb buildup to a minimum.
Shine it upI hate it when people touch my laptop screen or TV, because of the smudges their filthy fingerprints leave. Fingerprints can quickly turn from a mere annoyance to a permanent problem if they're left there for long, as the oils have an uncanny habit of setting in and eventually becoming impossible to remove. (Nothing will ruin your HDTV experience faster than a bunch of kids' handprints overlaying your video, forever.)

I've yet to find anything better than Purosol, which I've recommended in the past, for cleaning off LCD screens, but any store-bought LCD screen cleaner should work, as long as it's alcohol-free.

Don't forget to clean your camera displays and cell phone screen, too. Those touchscreens (like the iPhone's) can get especially nasty, riding around in your pocket all day.
Repair your mediaScratched CDs and DVDs can be mended. A variety of solutions are available on the market, but the cleaning-paste-and-towel method has always provided the best results for me.

Clean the surface of your CD with dish detergent and water. If scratches remain, use a commercial scratch repair kit that includes a thick paste that you rub into the media, and a microfiber cloth to wipe it clean.

I've never tried the motorized solutions that spin your disc around electronically while cleaning it, but users have reported mixed results on how well these really work. More expensive units seem to get better reviews, but maybe readers can offer feedback on their experiences with these devices in the comments below.

Mikhail Fridman Russian US$20.8B

Fridman spent his childhood in Ukrainian city of Lvov and studied at the Moscow Institute of Steel & Alloys in 1980s.

He founded Alfa Group in 1990s with college friends (and now fellow billionaires) German Khan and Alexei Kuzmichev; it's now a diverse conglomerate with oil, retail, telecom and banking interests.

Strong Kremlin connections include a former subordinate who now serves as a political adviser to Putin.

In 2003 he merged his oil company, TNK, with British oil giant BP, an achievement, considering that six years prior the two parties were fighting, with BP protesting his methods for taking over a partly BP-owned oilfield.

Now focusing on telecom; his Altimo Group has telecom holdings in Ukraine, Turkey, Russia and Uzbekistan.

In 2007 Fridman was declared unofficial winner of a protracted and multimillion-dollar legal battle over a stake in Russia's third-largest mobile carrier, Megafon

Prince Alwaleed Bin Talal Alsaud Saudi Arabia US$21B

The most active and successful investor in the Middle East took his investment vehicle, Kingdom Holding, public on the Saudi stock exchange in July 2007.

Kingdom Holding contains his investments in well-known companies such as Citigroup and News Corp., as well as Four Seasons Hotels and Fairmont Hotel management companies, among many others.

The share price of Kingdom Holding does not fully reflect the 45% drop in stock price of Citigroup, his largest investment, in 2007.

Alwaleed joined the Singapore government investment arm and several other investors in a $12.5 billion capital injection for Citigroup in January 2008; the size of his investment is undisclosed.

In the early 1990s, Alwaleed made a risky bet on Citigroup that paid off hugely; in recent years it accounted for nearly half his fortune.

Alexei Mordashov Russia US$21.2B

Son of mill worker parents, Mordashov studied economics in Leningrad in mid-1980s.

He was later named finance director of a steel mill. When the plant's elderly general director instructed him to buy up company shares so it would not fall into the hands of an outsider, Mordashov bought most of them himself. He became general director and built it into a conglomerate, acquiring automakers, coal companies, ports and transportation companies.

Today his Severstal is Russia’s third-largest steel company but is looking to get much bigger.

In a bid to expand internationally, Mordashov bought Rouge Industries of Dearborn, Mich., and Italian steel producer Lucchini, but in 2006 lost widely publicized battle for steel giant Arcelor to powerful rival and fellow billionaire Lakshmi Mittal.

In late 2007 he presided over the opening of a new mini-mill in Mississippi, in which he is the biggest investor.

One holding he cashed out of last year was Severstal-Auto.

Liliane Bettencourt France US$29.5B

Daughter of L'Oréal founder Eugene Schueller, a man who is said to have a checkered past, with wartime ties to the Nazi regime, Liliane is the world’s richest woman, thanks to her controlling stake in the cosmetics giant. She has held the stock for more than four decades.

She became a widow last November when her 88-year-old husband, Andre Bettencourt died.

Her Bettencourt Schueller Foundation supports medical, cultural and humanitarian endeavors in France and developing countries.

Theo Albrecht Germany US$23B

After World War II, Theo and his older brother, Karl, transformed their mother's corner grocery store into discount supermarket giant Aldi, which now has more than 8,000 stores and $67 billion in sales. They eventually split ownership and management of the group into North and South regions.

Theo still manages Aldi's less profitable northern chain with the help of his two sons.

In the U.S. he owns discount gourmet food retailer Trader Joe's as well as a stake in Supervalu Inc.

He has shunned the limelight for decades, after having been kidnapped for 17 days in 1971.

Little is known about him, though rumor has it that he is very thrifty, collects old typewriters and loves to golf.

Roman Abramovich Russia US$23.5B

Orphaned as a child, Abramovich dropped out of college, then made a fortune in a series of controversial oil export deals in early 1990s.

His fortune took off in 1995 when he teamed up with Boris Berezovsky (now also a billionaire) to take over oil giant Sibneft at a fraction of its market value. (When Berezovsky fled Russia in 2000 to escape fraud charges, he sold out to Abramovich.)

In 2003 to 2004 he sold stake in Russian Aluminum to fellow billionaire Oleg Deripaska, who is now ranked ninth in the world.

In 2005 Abramovich liquidated his biggest asset, selling 72.6% stake in Sibneft to gas titan Gazprom for $13 billion.

In 2006 he bought stake in the country's largest steelmaker, Evraz Group, and, early in 2008, a piece of Highland Gold, a U.K. mining company with operations in Russia.

He also spent some of his cash buying U.K. soccer club, Chelsea.

He recently finalized divorce from the mother of his five children, Irina, but largely stays out of public eye, except for occasional spottings with rumored girlfriend Daria Zhukova.

Lawrence Ellison US US$25B

Oracle titan reshaping the software industry via acquisition; has purchased 21 companies for more than $19 billion since the beginning of 2006.

Forging into retail, business intelligence software; determined to squeeze out German rival SAP.
Biggest challenge: making the myriad applications work together for the release of Oracle Fusion later this year.

Chicago-bred tech tycoon studied physics at U. of Chicago; didn't graduate.

Started Oracle in 1977. Took public in 1986, a day before Microsoft. Companies have been fiercely competitive since.

Side bet: invested $125 million in Web software outfit NetSuite.

Still yearning to win yachting's most prestigious trophy, the America's Cup. Lost last year to Luna Rossi.

Also owns 453-foot Rising Sun; building a smaller leisure boat because mega-yacht is hard to park.

Bernard Arnault France US$25.5B

Arnault put up $15 million from his family's midsize construction company to buy Christian Dior in 1985.

Since then he has built the world's largest luxury goods empire, LVMH Moët Hennessy Louis Vuitton, whose brands include Dom Perignon, Fendi and Tag Heuer.

LVMH, which he still heads, acquired premier French financial daily Les Echos from the Pearson Group last December.

Son Antoine, 28, and daughter Delphine, 32, sit on LVMH’s board.

Arnault has also set up an investment fund with his good friend and fellow billionaire, Albert Frere, in 2006; the pair own two wineries together.

Via his investment arm, Groupe Arnault, owns French tour operator Go Voyages and a stake in French retail chain Carrefour.

Arnault often spends New Year's Eve in his four-star hotel, Le Cheval Blanc, in ski resort Courchevel, France.

He is also said to be a skilled pianist.

Sheldon Adelson US US$26B

Cabdriver's son borrowed $200 from uncle to sell newspapers at age 12.

Studied voice in teens, later dropped out of City College in New York City to become court reporter.

Made first fortune in trade shows.

Created computer industry's marquee event, Comdex, in mid-1980s; sold show to Japan's Softbank for $862 million in 1995.

Then Vegas: bought Sands Hotel & Casino for $128 million, demolished it to build the $1.5 billion all-suites Venetian Resort Hotel Casino and the 1.2-million-square-foot Sands Convention Center.

Changed the way casinos do business by enticing conventioneers to Sin City midweek, taking emphasis off gambling. Sold suites for $250 a night, added high-end retailers, celebrity-chef restaurants.

Took Las Vegas Sands public in December 2004.

Li Ka-shing HK US$26.5B

Once a poor immigrant, Li got his start selling plastic flowers in Hong Kong in the 1950s.

Now Hong Kong's richest person.

His fortune is centered on conglomerates Cheung Kong and Hutchison Whampoa. Through them, he is the world's largest operator of container terminals, world's largest health and beauty retailer, a major supplier of electricity to Hong Kong and a real estate developer. Hutchison Essar sold its stake in an Indian mobile business for $11 billion in 2007; the group still has other telecom interests.

Li also has a $12 billion stake in Canadian oil company Husky Energy.

He has announced plans to donate one-third of wealth over time.

Eldest son Victor helps him run his massive empire; son Richard struck out on his own in early 1990s and is a billionaire in his own right

Karl Albrecht Germany US$27B

Germany's richest man.

After World War II, Karl and his younger brother, Theo, developed their mother's corner grocery store into discount supermarket giant Aldi, which now has more than 8,000 stores and $67 billion in sales. They eventually split ownership and management of the chain into North and South regions.

Now retired, Karl used to manage more profitable southern half of Aldi's business in Germany.

Fiercely private: little known about him other than that he apparently raises orchids and plays golf.

Oleg Deripaska Russia US$28B

Former metals trader survived the gangster wars in the post-Soviet aluminum industry.

His holding company, Basic Element, now owns Russian Aluminum (UC Rusal), automobile manufacturer GAZ, aircraft manufacturer Aviacor and insurance company Ingosstrakh.

In 2006 Rusal, SUAL and Glencore International, of Switzerland, merged their aluminum assets into the United Company Rusal, the world's largest aluminum producer.

Married to a relative of Boris Yeltsin, Deripaska has been busy expanding UC Rusal's activities in Russia and abroad, moving it into aluminum production in Nigeria and China.

To integrate vertically, he has signed agreements to produce coal in Kazakhstan and invest in a nuclear power plant in eastern Russia.

Attempting to get a stake in Norilsk Nickel, which co-owner (and fellow billionaire) Vladimir Potanin is fighting.

KP Singh India US$30B

Singh is now the world's richest real estate baron after listing his real estate development company DLF in 2007. The offering helped triple his fortune to $30 billion this year, up from $10 billion.

A former army officer, known as K.P., he joined his father-in-law's Delhi Land & Finance in 1961.

Singh later built DLF City in Gurgaon, his showpiece township on the outskirts of Delhi, by acquiring land from farmers. Over time, he transformed it into one of India's biggest real estate developers.

Group plans to raise another $1.5 billion by listing a subsidiary in Singapore.

A keen golfer, he now leaves son Rajiv, daughter Pia to run operations.

Ingvar Kamprad & Family Sweden US$31B

Peddled matches, fish, pens, Christmas cards and other items by bicycle as a teenager.
Started selling furniture in 1947.

Now, his company Ikea, which sells hip designs for the cost-conscious, is one of the most beloved retailers in the world, with an almost cultlike following.

Ikea now has stores in 40 countries, from Sunrise, Fla., to Guangzhou in China.

As egalitarian as his brand, Kamprad avoids wearing suits, flies economy class and frequents cheap restaurants.

Has been quoted as saying that his luxuries are the occasional nice cravat and Swedish fish roe.
Says his home is furnished mostly with his own Ikea products.

Last May was awarded the Global Economy Prize by the University of Kiel for his contributions to society.

Anil Ambani India US$42B

The year's biggest gainer, Anil Ambani, is up $23.8 billion in the past year and is closing gap with estranged brother, Mukesh, who ranks one spot ahead of him in the world at No. 5.

The sons inherited their fortune from their late father, renowned industrialist Dhirubhai Ambani. But they couldn't get along, and in 2005 their mother brokered a peace settlement breaking up the family's assets.

A marathon runner, his biggest asset is his 65% stake in telecom venture Reliance Communications.

He recently raised $3 billion from the highly anticipated initial offering of his Reliance Power, the biggest in India's history. Despite the hype, the stock tumbled 17% immediately after its February listing. In a bid to appease investors, company's board recently approved the issue of bonus shares.

Still feuding with brother Mukesh: battling him in court over a gas-supply agreement.

Mukesh Ambani India US$43B

Asia's richest resident heads petrochemicals giant Reliance Industries, India's most valuable company by market cap.

His fortune is up $22.9 billion since last year, making him the world's second-biggest gainer in terms of dollars. The biggest gainer was his estranged brother Anil, who ranks sixth in the world, just behind his older brother.

The sons inherited their fortune from their late father, renowned industrialist Dhirubhai Ambani. But they couldn't get along, and in 2005 their mother brokered a peace settlement breaking up the family's assets.

Mukesh is using some of his money to build a 27-story home.

Lakshmi Mittal India US$45B

Heads world's largest steelmaker, $105 billion (sales) ArcelorMittal, which accounts for 10% of all crude steel production.

Just delivered 580 tons to be used in construction of the World Trade Center memorial in New York.

With 44% stake, is the company's largest shareholder. Longtime resident of London is Europe's richest resident.

Bill Gates III United States US$58B

Harvard dropout and Microsoft visionary no longer the world's richest man.

Blame Yahoo!: Microsoft shares have fallen 15% since the company boldly attempted to merge with the search engine giant to better fight Google for Internet dominance.

Gates is preparing to give up day-to-day involvement in the company he co-founded 33 years ago to spend more time focused on his philanthropic endeavors.

Bill & Melinda Gates Foundation has $38.7 billion in assets, donates to causes aimed at bringing financial tools to the poor, speeding up the development of vaccines (for AIDS, malaria, tuberculosis), bettering America's lagging high schools.

Sells 20 million Microsoft shares every quarter, proceeds going to private investment vehicle Cascade; more than half of net worth now outside of Microsoft.

Company spent $6 billion to land Web ad company Aquantive last May.

Would-be rival to Apple's iPod, the Zune, not yet a hit.

Believes Microsoft's far-flung bets, including 10-year affair with Internet-based television, may soon pay off; says next 10 years will be the "most interesting" in software history.

Helú Slim & Family MEX US$60B

Second-richest man in the world this year; even richer than Microsoft's Bill Gates, at least for now, thanks to strong Mexican equities market and the performance of his wireless telephone company, America Movil.

The son of a Lebanese immigrant, Slim made his first fortune in 1990 when he bought fixed-line operator Telefonos de Mexico (Telmex) in a privatization.

In December, America Movil struck a deal with Yahoo! to provide mobile Web services to 16 countries in Latin America and the Caribbean.

A widower and father of six, Slim is a baseball fan and art collector. He keeps his art collection in Mexico City's Museo Soumaya, which he named after his late wife.

In recent years, he has donated close to $7 billion worth of cash and stock to fund education and health projects, and to the revitalization of Mexico City's downtown historical district.

Warren Buffett United States US$62B

America's most beloved investor is now the world's richest man.

Soared past friend and bridge partner Bill Gates as shares of Berkshire Hathaway climbed 25% since the middle of last July.

Son of Nebraska politician delivered newspapers as a boy.

Filed first tax return at age 13, claiming $35 deduction for bicycle.

Studied under value investing guru Benjamin Graham at Columbia.

Took over textile firm Berkshire Hathaway in 1965.

Today holding company invested in insurance (GEICO, General Re), jewelry (Borsheim's), utilities (MidAmerican Energy Holdings), food (Dairy Queen, See's Candies).

Also has noncontrolling stakes in Anheuser-Busch, Coca-Cola, Wells Fargo.

Insurance operations flourished in 2007. "That party is over. It's a certainty that insurance-industry profit margins, including ours, will fall significantly in 2008."

The Oracle of Omaha issued a challenge to members of The Forbes 400 in October; said he would donate $1 million to charity if the collective group of richest Americans would admit they pay less taxes, as a percentage of income, than their secretaries.

Had long promised to give away his fortune posthumously.

Irrevocably earmarked the majority of his Berkshire shares to charity in 2006, mostly to the Bill & Melinda Gates Foundation. Gift was valued at $31 billion on day of announcement; donation will far exceed that sum so long as Berkshire shares continue to rise.

Frozen Grand Central

Are You Born to Be a Billionaire?

by Maureen Farrell, Forbes.com

Empire builders like Bill Gates and Sam Walton aren't just great businessmen. They are bona fide revolutionaries.

Self-made billionaires don't dominate industries--they transform them and spawn new ones. That takes more than intelligence, courage and luck. It takes divine-like vision.

Billionaire entrepreneurs are "not working within the confines of the current market," says Gerald Kraines, chief executive of the Levinson Institute, a business consulting firm in Jaffey, N.H. "They're anticipating things much further afield. You have to see spaces that no one else sees."

The world's self-made billionaires certainly have vision in spades, spanning everything from how computers work to how people shop. But the ability to see around corners isn't the only quality that separates the very accomplished from the stratospherically wealthy. To crack the $1 billion barrier, you need total, unwavering belief in your vision--and an immutable will to pull it off.

"[Billionaire entrepreneurs] need a deep passion and a point of view about the future," says Peter Skarzynski, chief executive of Strategos, a Chicago-based consulting firm that advises global companies, including Nokia and Whirlpool. "They fundamentally believe that they have a better way to solve a set of problems than how they're being solved now."

Billionaires also have a seemingly ravenous appetite for risk. It's hard enough for many of us to muster the courage to abandon our cubicles and start a small company, let alone build an empire. And while the risks pile up as businesses expand, billionaires have a confidence bordering on arrogance that checks their fear and doubt, says Skarzynski.

Are you a born billionaire? Before you tackle a serious growth strategy and all its attendant hassles, ask yourself some hard questions at the outset, says executive psychologist Debra Condren, who has worked with big names like 3M, Chevron and Hewlett-Packard.

The most important one: Why go big at all? Are you looking to cash out in a sale? Enamored of the thought of having your own stock ticker? Suffused with competitive desire? Whatever your reason, get a grip on it before you decide to kick your zealous pursuits into high gear.

Next, ask yourself if you are willing to make tough decisions for the growth of your company. If you have an intense loyalty to the small group who helped get things off the ground, understand that those folks may not be able to come along for the ride. If you're not comfortable supplanting (or firing) them, stay small.

For entrepreneurs who prize their independence, ask yourselves how much of it you're willing to give up. As the demands mount, both your schedule and decisions become less your own; worse, you may have investors and board members to appease.

"It becomes very hard for company founders to accept that they are no longer the real boss," says Carl Robinson, a psychologist who works primarily with growing, middle-market companies.

Like holding forth in public? You'd better, because companies of any significant size need a public face. Entrepreneurs who thrive on public performances--weekly meetings, shareholder gripe sessions, even television interviews--have an easier time than those who shun the spotlight.

"You need to have the ability to fill a room and inspire people," says Condren. If public speaking isn't your forté, but you're still hankering to grow, find a confident substitute who can sell your story.

Not only do you have to be able to communicate, you need a knack for building consensus. In most cases, the bigger your business, the more input you need from those around you--and that means being willing and able to marshal them to your cause. Have a my-way-or-the-highway mentality? Can your growth plans.

In the end, chasing billionaire status--and not crashing along the way--is as much about knowing who you are as it is about knowing how to nab new customers or manage inventory. Who knows? Maybe a modest $100 million might be a better fit.

Paul Potts

Happy Leap Day! (Unless You're in Debt)

This being February 29 — Leap Day — today is costing you an extra day's interest if you're repaying a debt. On the bright side, it's earning you a tiny bit more on your bank deposits.
Whom do we have to thank — or curse — for this extra day every four years? Julius Caesar and his lover, Cleopatra.

In 48 B.C., Julius Caesar was in Alexandria, Egypt, absorbing the culture and science — and decadence — of Cleopatra's capital. There he learned from an old sage named Acoreus about Egypt's calendar, which had a leap year.

At the time, the Roman calendar did not. Like most ancient calendars, it was based on the phases of the moon, which in one cycle takes about 29.5 days. But 12 months of 29.5 days doesn't equal the true length of the year as measured by the orbit of the Earth around the sun. It's off by 11 days, so anniversaries, holidays, and entire seasons to drift backward on lunar calendars.

The ancient Egyptians had realized this and created a calendar 365 1/4 days long — with the fraction averaged in by adding an extra day every four years.
When Caesar returned to Rome, he created a 365-day calendar with a quadrennial leap year, adding the extra day in February.

A minor hassle for some, perhaps, but certainly better than the alternative faced by the Romans. Back in 45 B.C., for instance, their lunar calendar had drifted backward by 80 days — nearly three months. Spring had become winter, and autumn came in the summer months.

To correct this, Caesar decreed that 45 B.C. would be 445 days long. Think about the extra interest on 80 extra days! No wonder they called it "The Year of Confusion."

Doglish

Why Buy Expensive Toys

Get Your Financial Priorities Straight for 2008

Right now, your financial motivation tank is full; you're resolved to make all your New Year's resolutions stick. But I know that in a few weeks the tank is going to be running near empty as many of you get distracted or confused or frustrated about how to convert resolutions into reality.

What I hear time and time again is how hard it is to figure out how to set financial priorities. Resolutions to be more financially on top of things fall by the wayside because people don't know where or how to start. So, in my continuing series "You Asked For It," I'll review the most common questions I get on the topic of how to take control of your financial life.

Tackle Your Debt
Q: I can't afford to pay down my credit card debt and save for retirement at the same time. Which should I do first?
A: Getting your financial life in order is an exercise in multitasking. You should tackle different goals at the same time. Too often, I see people take the all-or-nothing approach; they think they need to concentrate all their money and time on just one task. I think it's wiser to take a broader approach.
For example, if you have a 401(k) or 403(b) at work and your company offers a matching contribution, there's no question that you must participate in the program and contribute enough to get the maximum match from your employer. I don't care how much you're drowning in debt, there's no bigger priority than to get what is essentially free money from your employer.
At the same time, you have to focus on the credit card debt. Often, people are flummoxed when they have multiple credit cards with unpaid balances. Here's the strategy: Pay the minimum due on each card each month, of course. That's the only way to stay in the good graces of the card company and keep your credit score healthy. But in addition to those minimum payments, add an extra payment to the card that charges you the highest interest rate.
Notice I didn't say the card with the biggest balance. Once you pay off all the debt on the card with the highest interest rate, start tackling the card with the second-highest interest rate, and so on.

Scrutinize Your Budget
Q: Where am I supposed to find the money to set aside for paying off bills and saving? I can barely get by today as it is.
A: I hear this all the time -- you're too broke to save money. I don't buy it. The majority of people who come to me with this question have all sorts of opportunities to spend less, which translates into saving more.
Look, I'm not going to tell you what's a necessity and what's a luxury. The only way to take control of your financial life is to decide that for yourself. If you really want to change your ways, just scrutinize your monthly bank and credit card statements; there are plenty of places you can scale back if you make that your priority.
A great way to get you to save more is to simply make it automatic. Set up a direct deposit from your checking account into a savings account. The reality is that once you take the plunge to automatic savings, you'll be able to adjust to having less in your checking account. Right now, you can earn more than 4 percent interest by setting up an account at online banks such as ING Direct, HSBC Direct, and EmigrantDirect.

Do the Right (Retirement) Thing
Q: I want to save for retirement, but I get lost when I try to figure out what to do. Is there a simple way to do the right thing?
A: If you're single and your modified adjusted gross income is under $101,000, or you're married and your gross income on your joint tax return is under $159,000, you can invest the maximum $5,000 in a Roth IRA in 2008. (If you're at least 50 years old, the maximum is $6,000.) By now, you know that I think a Roth IRA is the single best retirement investment after a 401(k) with a matching contribution.
If your income makes you ineligible for a Roth IRA, I recommend using a traditional IRA even if it's non-deductible. Both types of IRAs give you the benefit of having your money grow tax-deferred while it's invested. The difference between the two is that with a Roth IRA you'll owe no tax on your withdrawals in retirement assuming you pass some basic rules; with a traditional IRA, you'll owe income tax on all withdrawals in retirement. That's why a Roth is preferable if you're eligible.
On IRAs and Lifecycle Funds
So where exactly should you invest your IRA money? If you're up for making two investments, I recommend putting 80 percent or so in a low-cost broad index fund or exchange traded fund (ETF) and the remainder in an international index fund or ETF. I'm a stickler for low costs, so funds such as Vanguard Total Stock Market Index (VTSMX) and Vanguard Total International Stock Index (VGTSX) are sound choices. For ETFs, you have plenty of options with Vanguard, as well as iShares S&P 500 (IVV) and iShares MSCI EAFE (EFA).
For those of you who really want a super-easy investment solution for your IRA, check out what are called lifecycle funds, or target retirement funds. A lifecycle fund is basically a one-stop-shopping option.
You choose a portfolio with a "target date" that's close to when you expect to retire. The portfolio will then hold a mix of investments that are considered correct for your time horizon; as you get closer to that retirement target date, the portfolio will automatically move into more conservative investments. Vanguard and T. Rowe Price have a full lineup of low-cost target funds you can choose from to match your expected retirement date.

Plan Ahead
Q: We have two young children we want to start college funds for, but we can't afford to save up for their school costs and continue to build our retirement funds. What should we do?
A: Focus on your retirement. Trust me, if you love your children, you'll make securing your own retirement the priority.
There are plenty of ways for your kids to get help with college costs -- loans, scholarships, etc. -- but there's no help if you find yourself without enough money to live on in retirement. I don't want you to end up needing to ask your kids for help down the line because you didn't make saving for retirement your main priority.
Q: What are the best investments for next year?
A: Who knows? Anyone who tells you they do is just guessing. Oh, sure, they may be paid a lot of money to guess for you, and no doubt some Wall Street watchers will guess right. But plenty will guess wrong.
My point is that it's ridiculously hard to nail what the top individual investments will be, especially over a short time period of 12 months. I think one of the biggest problems investors create for themselves is thinking that investing is about making a big killing fast.
Yes, that would be ideal, but it's extremely hard to pull off, and the risk is that you end up losing a lot of money if you bet wrong. Or you never start investing in the first place because you're too scared of losing it all. That's why I recommend broadly diversified index funds and ETFs for your core portfolio.
Will you have the No. 1 investment next year? Probably not. Will you have the worst investment next year? I seriously doubt it. What you will have is a portfolio that will grow over time -- years, my friends, not months -- in line with the general markets. Over decades that's proven to be a profitable approach -- no doubt one of your biggest financial priorities.

Redneck Golf

Test For New Lip Balm

Money Management Tips

Automate investing and keep an eye on your credit score. Just two smart money management moves.

Some of these may seem like no-brainers, but all are worth a look, and a few might just change your life.

Automate your financial life. Call your mutual fund or broker to have monthly investments routed from your bank. Do the same for your monthly utility, cell-phone and cable payments. You'll find it easier to budget, and you'll never pay a late fee again.

Know your credit score. Order your credit score from all three major credit bureaus for $45 from Myfico.com. True, you're entitled to free copies of your credit reports this year, but one detail will be missing: the magic number that lenders and insurers use to judge your credit-worthiness. Pay for that.

Don't take it with you. Pass on money to your children now rather than bequeathing it. Gifts of up to $11,000 a year are tax-free. Besides, your kids and grandkids will thank you -- which they can't do if you're dead.

Digitize the financial drudgery. Buy either Quicken or MS Money, software that will help you track your spending, see your portfolio allocations, estimate next year's tax bill -- all the tedious tasks you know you ought to do but never would unless someone made it very easy. Pick up the premium edition of either program for $70 and change at Amazon.com. You'll spend a couple of hours on initial setup, but from then on, you'll be amazed at what you can do with your money, once you know what you're doing with your money.

Have a financial plan. Hire a financial planner to review your retirement and college savings plans. At http://www.garrettplanningnetwork.com/ and http://www.myfinancialadvice.com/, you'll find planners who work by the hour (usually $150 to $200 per). Getting on track will take eight to 10 hours up front, plus an hour or two for a yearly checkup.

Stop assuming you're immortal. Hire a lawyer to craft a will, a durable power of attorney, a living will and a health-care proxy. It may cost $1,500 to $2,000 (more for large or complicated estates), but could save your heirs thousands in taxes and fees. Unless, of course, you live forever.