Is This 40-Year Plan for You?

01/07/2014 6:00 am EST

Focus: STOCKS

Alan Ellman

President, The Blue Collar Investor Corp.

The Blue collar Investor's Alan Ellman discusses the goals of his new book, which includes his own 40 year plan.

SPEAKER:  My guest today is Alan Ellman from the Blue Collar Investor.com.  He has a new book out designed for students and college students specifically.  Alan, talk about your book.  Why did you decide to write this?

ALAN ELLMAN:  Tim, this is the book that I have always wanted to write, I started about two years ago, and it just came out in November of 2013.  Basically, I had two goals with this book.  The first goal was to educate our youth about investing in the stock market.  I think the financial literacy in this country, really all over the world, is very low, so what I wanted to do was to write a book that will explain how to invest in the stock market, but do it in language that the average student can understand, so they are not really intimidated by it.  Goal number one was education.  Goal number two was to set up a user-friendly plan that students can start using right today where they can start taking advantage of compounding their money by investing in the stock market.  I set up a hypothetical situation.  I call it a 40-year plan to get rich slowly and the basis of that plan is you are going to invest 10% of your gross annual income starting today and divide it up into 12 monthly increments.  We do it in a user friendly way so it is automatically taken out of your checking account and you buy initially mutual funds based on broad market indexes that have low expense ratios like for example Schwab mutual funds or Vanguard mutual funds.  Basically, the premise is, and it can be adjusted, that for the first 20 years of this 40-year plan the person is earning $60,000 a year average gross annual income and for the second 20 years, $80,000.  Now that can be adjusted, but the premise is with a historical return on the stock market of 8% to 10%, and in my book I use the lower end 8%, that by the age of 58 if you start at 18, you are going to have $1.8 million.  The reason for generating that kind of income and that kind of profit is the power of compounding and starting at a young age.

SPEAKER:  Your website deals a lot with options.  Do you talk about that as well?

ALAN ELLMAN:  In the very last chapter of that book, I talk about covered call options.  It is not a primary focus of that book.  This book is really completely different from anything else I have ever written before.  It is my fourth book and the one that I am very excited about now because I think it is going to have appeal to schools and universities, not only throughout this country, but hopefully throughout countries throughout the world. 

SPEAKER:  All right, where do I get it?

ALAN ELLMAN:  Right now, you can go to my website, The Blue Collar Investor.com.  It is also up on Amazon.com and coming out in Kindle version very shortly.

SPEAKER:  Alan thanks for your time.

ALAN ELLMAN:  My pleasure.

SPEAKER:  You are watching the Money Show.com Video Network.

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