Your "Stake in Life" Stock

You could accumulate great wealth if you bought the best companies and held them, if you did not trade them in for other merchandise.

Refining this further, I believe that to structure the ideal financial life you should identify, as early in your working life as possible, one or two more companies that you believe in for the future. I don't care what they should share certain characteristics:

1. They should have universal, global appeal like GE, or Gillette, or McDonalds.
2. They should have instant name brand identification like Coca Cola or Microsoft.
3. They should have products or services that you dispassionately believe will continue to be in demand for years to come; they should be products or services that you and your family find special eben over the long run.

Start to buy one of your choices, even in smal amounts, through stock discounters so that it is a low-cost enterprise. Have the dividends reinvested in stock if you can. Treat this exercise like a savings account, by adding the same amount every month, or on a special date like a birthday. What you want here, as with prune juice, is regularity.

Every time the stock goes down 15 or 20 percent (and there will be plenty of times like that over the years), buy more. This takes discipline. And the smartest among you, when you encounter these dips in the market, will shout, "Hooray! Now I can add to my stake in life company at bargain prices!"

Your stake in life stock is not for sale, unless some predator take its off your hands in a buyout, But by then, it will undoubtedly be a long-term capital gain - and you can being your hunt for the next gem. A very few stake in life stocks should form the core of your holdings. Everything else builds around this core: bonds, preferred stocks, the common stocks you will buy and sell at various times.

Of course, the more of something you hold, the higher the risk. But as a wealth-building strategy, concentration over time, with well thought out companies, can set you free.