READY MONEY: THE EIGHTFOLD WAY OF STEADY EDDIE

By Scott Burns

Photography by Lisa Means and Digital Vision

It arrived on the winter flood tide of new book titles. It swirled in the froth of the publishing wave for a few moments. An eye blink later, it was swept away.

The title was catchy enough: Getting Rich in America. But in January of 1999 — when Amazon.com was going to rule the world, when fortunes were being made in companies unburdened by revenue, when stock options were transmuting into fleets of new Ferraris and private wine cellars the size of the New York Public Library — well, a book subtitled 8 Simple Rules for Building a Fortune and a Satisfying Life failed to attract much attention. Co-author Richard B. McKenzie, a graduate school management professor at the University of California, Irvine, tells me the book sold about 40,000 copies. It lives on, he says, in paperback.

Today, we might take those eight simple rules more seriously. Stock options are far enough under water to inspire Jules Verne. Our collective losses are measured in trillions. The market for million-dollar houses has been pronounced “slow.” There is less traffic in the fast lane.

The rules are simple. Think of America as the Land of Choices. Take the Power of Compound Interest Seriously. Resist Temptation. Get a Good Education. Get Married — and Stay Married. Take Care of Yourself. Take Prudent Risks. Strive for Balance.

Easier said than done, of course.

But that’s it. The Eightfold Way of the Steady Eddie. The magic lies in the sublime power of persistence, the tenacity of the tortoise.

What can that power do? Consider the consequences of two Steady Eddie commitments, if they had been made in 1980. If you had purchased a median priced home back then, you would have paid $62,200, up a frightening 11.7 percent from the previous year. By the end of last year, the same house was worth $147,500. The increase in equity from appreciation was $85,300.

The second commitment was to invest $500 every quarter. To keep things simple, you opened an IRA account and chose a stock index fund. By the end of February 2002, your investment was worth $243,974. It suffered a miserable decline from its August 2000 peak of $325,200 in spite of your continued quarterly commitments. Those who live with half-empty glasses can cry over the lost milk.

But add the two figures and you’ve got a net worth of $329,274. That’s not bad for two very pedestrian decisions.

In the world of great wealth, this is not a large number. It’s far from membership in the Forbes 400. Indeed, it isn’t in the top 1 percent of households where the entry requirement is $1 million to $6 million, depending on your age.

If you look ahead in the long line of wealth, there always will be someone in front of you. That’s the way it is. Oracle’s billionaire Larry Ellison suffers existential pain as he contemplates Bill Gates.

Now look the other way. How many are behind instead of ahead? There, Steady Eddie sees a very long line. Two — just two — Steady Eddie commitments won a place nicely ahead of 75 percent of all households in America.