Get Rich by Doing... Nothing

Last Updated Jan 3, 2011 11:03 AM EST

In just a few hours earlier this month, I raked in $16,000. The following day, I earned a bit more than $3,000. What did I have to do to generate a profit of nearly $20,000 in just two days? Nothing. But I had to be relentless and disciplined about it.

You think doing nothing is easy? Not a chance. There have been plenty of times that I really wanted to do something. But like a good trouper, I took a few deep breaths and sat on my hands. Sometimes, when I got really desperate, I had to distract myself -- watch t.v.; read a book; take a walk; call a friend; look at the scenery.


You want to get rich by doing nothing too? Okay. But you're not going to like it.


There are two places where you have to practice doing to nothing if you want to get rich. And you have to realize that all the other people in those environments are going to make it really tough on you.


To get rich and stay rich, you need to practice doing nothing -- or at least practice some heavy procrastinating -- at the shopping mall and on Wall Street.


A reader explained to me how she manages to procrastinate her way to wealth in the shopping mall. If she needs something, she buys it. But if she just wants something, she vows to wait a week before pulling out her credit card. "Sometimes I'll go back," she says. "But 90% of the time, if I just walk away for even a half hour, I realize that I don't want it that much."


The pay off? My procrastinating reader is in her early 50s and she's managed to buy three homes -- with cash -- and now has no mortgage, steady rental income and $185,000 in the bank, in addition to a rich retirement plan. She's also still got a day job, which she intends to keep until retirement, whether she needs it or not. She was having trouble deciding where to invest all her money. This is a problem you can live with.


But the purpose of clever merchandising -- putting perfectly accessorized outfits on perfectly proportioned (faceless) plastic mannequins is all about us seeing ourselves looking perfect and perfectly proportioned in those incredibly layered outfits that are sold a la carte.


So what if I actually look, well, fat in all those layers? The really clever stores couple eye-popping displays with size deflation. "Really? I wear a size 2 here at Ann Taylor? I haven't worn a size 2 since...well, since never. I need this size 2 pair of $198 trousers, along with the $50 shell, $75 sweater, $67 scarf and $250 boots. I need to go to a party wearing this beautifully accessorized size 2 outfit." Damn the credit card bills; checkstand ahead.


And gadgets? Ever wonder why every Brookstone window has a massage chair and 25 shiny moving objects? Because you're going to walk by and say: "That is so coooool." What does it matter that no one actually needs a fully functional toy helicopter? It is awesome.


See, I told you doing nothing wasn't going to be easy. Turn away. Practice your mantra: "I'll get it later, if I decide that I really, really want to." Put your hands in your pockets. Do not pull out your wallet. Not now. Not today.

That was clearly not easy. But you're not done.


If you want to stay rich, you've got to practice that kind of restraint when you're dealing with Wall Street too. The only way you're going to earn $20,000 in two days is if you do nothing, year-after-year, even when you read about the Ten Top Stocks You Should Buy Now! (I had so much trouble deciding which story to link to that I actually linked each word to a different one. Please don't buy any of these stocks.)


How do you do that? You buy a portfolio of index funds that match your age and goals. You can match age and goals by talking to a financial planner, or by following guidance in blogs or a book. John Bogle, founder of Vanguard, tells you how in his Little Book of Common Sense Investing. I do much the same in a chapter of Investing 101 that's called the Lazy Man's Portfolio Planner. That part is not difficult.


The hard part is leaving that portfolio alone. When times are good and you're tempted to make them better by buying the "hot" stock du jour, you need to leave your index funds alone. When times are bad, and you're convinced that they're only going to get worse, so you should sell your stocks -- like many people did when stocks dropped into the 6,000 range -- you need to leave your portfolio alone. Once a year, when people will tell you to "rebalance," you need to rebalance by adding money to the sectors of the market that did the worst the year before. Yes. You buy what did badly. That's called buying low. Some day when you want to live on your riches a long time from now, you will sell high. But not today.


Today, you're going to build up a portfolio and sit on it. If you do nothing for a really, really long time, you'll have a portfolio that earns more than you do. That's the power of compounding, which only works when you are disciplined enough to do nothing. Relentlessly.


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    Kathy Kristof is an award-winning financial journalist and the author of Investing 101.

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