Getting rich on a $20,000 salary

[MdmeX]

Getting rich on a $20,000 salary

This 69-year-old parking-lot attendant used earnings from odd jobs to start investing. Now he coaches others on how they can invest.



Latest Market Update

October 12, 2007 -- 16:25 ET [BRIEFING.COM] The stock market didn't spend much time licking its wounds from Thursday's sudden stock price slashing. Instead it got right back on a winning track, aided by some reassuring economic data, M&A activity, and good earnings... More

By Kiplinger's Personal Finance Magazine

Earl Crawley, 69, better known as Mr. Earl, earns $20,000 a year as a parking-lot attendant. But he has amassed a stock portfolio worth more than $500,000.
How did you get started investing?
Soon after I started working for Mercantile Bank in Baltimore 44 years ago, one of the bankers took me aside and told me I didn't have enough education to go very far at the bank. He suggested I invest in stocks.
Where did you get the money?
I did it with good old-fashioned nickels and dimes. My mother taught me how to budget, which made me appreciate how a little money can grow. I saved what I could from odd jobs, such as lawn cutting and window washing, that I did in addition to my day job. I used that money to buy one share of IBM (IBM, news, msgs) stock back in 1981.

How did you learn how to invest?
I really didn't know enough to be scared. In school I was considered a slow learner -- dyslexic, it's called now. My true gift from God is my ability to listen, and that's how I'm able to ask questions and use tips from the brokers, financial planners and bank customers I see every day.
Do you have a formula for picking stocks?
When I first started out, I had to be conservative and take my time because I couldn't afford to lose money. Now I look for companies with stability that pay dividends. I read the stock pages but don't claim to know everything about them. I have a broker, but many times I'll go where my spirit leads me.

• <LI class=first>Start investing with just $100
• Mr. Earl on video: If he can do it, so can you
• Investing 101: Buy your first stock or fund
• Money basics: How to invest and manage your money
• More tips for new investors
• Investors guide to volatile markets

Any stocks you're excited about now?
I've been buying shares of ExxonMobil (XOM, news, msgs).
We've heard that you're helping others invest.
I started an investment club at my church. And I've been coaching a couple of young men, such as bar-and-grill cook Antawn Davenport and Dana Mouse Smith, who toured with the late rapper Tupac Shakur. They can help spread the message that people can do whatever they set their minds to do.
Crawley was interviewed by David Benjamin for Kiplinger's Personal Finance Magazine.
Published Sept. 17, 2007

[Hortical]

This is a great story! He looks to be up in age, and he should retire soon and enjoy his money.

[Karl]

This is a great story! He looks to be up in age, and he should retire soon and enjoy his money.

Agreed - great story!

Looks late 60s early 70s. Better not retire soon...U$500,000.00 will not last more than 25 years...and, taxes he will have to pay on that depends on what various instruments he has his money in...(i.e. the portfolio mix)...and if he draws down $20,000.00 per year. If he wants to live anywhere near the standard to which he is accustomed...I suggest he continue working...perhaps, "slowing down" as time goes on...as long as he is able to.

First: He may want to think on how long he may continue living?

Second: He may want to consider that he may have increasing medical expenses?

Third: he may want to consider that the cost of living will not remain static...but, climb?

Four: He may want to consider that he may have to make large pay-outs...repair to home if he has one...nursing home or in-home nursing expenses as he ages..etc, etc?

Five: He would think on what his $20,000.00 salary has done for him thus far? How long could he draw-down say, that same $20,000.00 annually?

Sixth: He may consider what is it he will do to keep active - keep boredom and possible depression at bay - engage himself with while in retirement? That series of activities may cost a pretty penny.

He must factor in his Social Security monthly check and any other retirement income...

...He may just consider continue working as long as possible. ...if he does not continue working it could be hell if he lives beyond 95?

[Islandman]

Karl, the man can retire in his current situation if he chooses to maintain his current lifestyle.

Even if he chooses to be ultra-conservative and puts all the money in a fixed-income account earning 5% or so he will earn $25K a year before taxes on his $500K without touching his principal. That is more than he is earning on his current salary now. Throw in Social Security and he is more than OK. He already qualifies for Medicare so that should handle a lot of his medical expenses.

Alternatively if he chooses to mix it up a bit and put 20-30% in the market he will probably do a lot better, though with greater risk.

If I was in his situation I would be looking to slow down soon, but maybe he enjoys the job he has right now and works to keep the mind and body active.

[Karl]

Karl, the man can retire in his current situation if he chooses to maintain his current lifestyle.

Even if he chooses to be ultra-conservative and puts all the money in a fixed-income account earning 5% or so he will earn $25K a year before taxes on his $500K without touching his principal. That is more than he is earning on his current salary now. Throw in Social Security and he is more than OK. He already qualifies for Medicare so that should handle a lot of his medical expenses.

Alternatively if he chooses to mix it up a bit and put 20-30% in the market he will probably do a lot better, though with greater risk.

If I was in his situation I would be looking to slow down soon, but maybe he enjoys the job he has right now and works to keep the mind and body active.

Good!

...firstly that 5% has taxes 'chopping off' 3% or thereabouts...and, other costs before he receives the money take another .5%...his real take home shall be approximately 1.5%...

...but, cost of living will not increase? ...his medical expenses could not do through the roof? ...etc. The maintenance on his house will not escalate over time? ...there will be no additonal leisure time and thus making of effort to be 'gainfully' ...not as per working...but as per enjoying his retirement...active?

...and, there could not come a time when he may need addtional funds to deal with nursing home expenses. (You do know that too many nursing homes where only 'government money' takes care of the expenses the 'customer' suffers abuse - lack of proper food/diet...inadequate helping with personal hygiene, etc...not to mention physical and mental abuse...and, we are speaking in the context of aiming for 'to the style to which he is accustomed'?).

We do not prepare for 'all things running sweetly and smoothly' we prepare for as best as we can, the 'sweet and smooth' and a buffer for as far as possible unforeseen contingencies.

Remember we do not know what the future holds! Better save than sorry!
Not changing course ...the gentleman needs to keep working as long as he can.

Interesting article - http://articles.moneycentral.msn.com...etirement.aspx

[Karl]

Karl, the man can retire in his current situation if he chooses to maintain his current lifestyle.

Even if he chooses to be ultra-conservative and puts all the money in a fixed-income account earning 5% or so he will earn $25K a year before taxes on his $500K without touching his principal. That is more than he is earning on his current salary now. Throw in Social Security and he is more than OK. He already qualifies for Medicare so that should handle a lot of his medical expenses.

Alternatively if he chooses to mix it up a bit and put 20-30% in the market he will probably do a lot better, though with greater risk.

If I was in his situation I would be looking to slow down soon, but maybe he enjoys the job he has right now and works to keep the mind and body active.

No doubt the gentleman has done a great job! I would wager a guess that he has done...when an income comparison is made...better than most if not all of us.

http://www.advisortoday.com/resources/howmuchmoney.html

[Islandman]

Your calculations are way off. If you are earning $25K a year in income there is no way you are paying that much in taxes. Your tax bracket is probably close to 10%

0.5% in fees on a fixed income account? You can get mutual fund accounts for <0.1% in fees and you don't need a broker or financial advisor to get them either.

[Gamma]

karl...di man is 69....him can tek it easy now...him must can purchase a nice annuity ...wha mek yuh wa'an kill of di man?

is time him enjoy him money. if he is a collector and he just prefers to know he has the moneythen that is fine too...thing is he must now do things which he enjoys!

[MdmeX]

karl...di man is 69....him can tek it easy now...him must can purchase a nice annuity ...wha mek yuh wa'an kill of di man?

is time him enjoy him money. if he is a collector and he just prefers to know he has the moneythen that is fine too...thing is he must now do things which he enjoys!

A suh me say too. At 69 him should go on a couple cruise, or take up FISHING Enjoy some of that himself.

[Jawge]

Careful babba mine dem call yuh
di eternal learner. It look like mi an yuh can talk. Is same mi too skilled in mind like others but try knot one an two quarters. Di Bible say "CAST YOUR BREAD UPON THE WATERS AND YE SHALL FIND IT IN MANY DAYS".