Make money like a rich person

Six of 10 multimillionaires say "taking some risk" was key to building their wealth, reports Spectrem, a wealth research firm.

One high-risk investment with potentially big gains, says planner Chris Cordaro: so-called frontier markets, like Vietnam, Sri Lanka, and Kazakhstan. "They have the valuations and growth potential that emerging markets used to," says Cordaro.

To gain entry, go with an ETF like Guggenheim Frontier Markets (FRN) with big bets on Chile, Egypt, and Colombia and smaller stakes in places like Lebanon and Kazakhstan where it's difficult for Americans to invest. Plus, it's cheap, charging just 0.7% of assets.

7 stocks to rev up your portfolio

You may be able to give your portfolio returns a boost by investing in certain large-company stocks -- that is, those that are selling at a discount or those that are expected to increase their earnings at a decent clip.

In general, value investing (buying beaten-down stocks that are poised to rebound) tends to outperform growth investing (buying firms with rapidly increasing earnings).

From 1928 to 2011, as a group, U.S. large value stocks delivered 10.8% average annual returns, vs. 8.7% for their growth counterparts. But this strategy requires guts and patience. And there are long stretches where the category lags, like the past 10 years.

So also cherry-picking the right growth stocks can add octane to your portfolio, without the risk of burnout. Here are some value picks from Wally Weitz, manager of Weitz Partners Value and some growth picks from Larry Puglia, manager of T. Rowe Price Blue Chip Growth.

Give your portfolio a major overhaul

(Money magazine) -- Making real money today is a challenge, whether you're just starting out or already have a strong financial foundation.

Shop for discounts. Value investing (buying beaten-down stocks that are poised to rebound) tends to outperform growth investing (buying firms with rapidly increasing earnings). 

From 1928 to 2011, U.S. large value stocks delivered 10.8% average annual returns, vs. 8.7% for their growth counterparts. This strategy requires guts and patience. 

"You're taking the other side of trades made when people can't wait to get out," says Wally Weitz, manager of Weitz Partners Value (WPVLX).

And there are long stretches where the category lags, like the past 10 years. Feeling brave? See three stocks Weitz likes. 

Buffer against losses. Covered calls can boost long-term returns up to 20%, University of Utah finance professor Robert Dubil found. You sell an investor the right to buy a stock or an ETF you own should the shares rise above a set price within a set time. The cash you pocket cushions losses if the stock falls. But if it never hits the strike price, you keep the money and the shares. 

Be a cheapskate. The surest way to improve returns? Minimize investing expenses.

Index funds and ETFs are a good way to go: Vanguard Total Stock Market (VTSMX) charges just 0.17% vs. 1.4% for the typical actively managed stock fund.

Growth of $100,000 after 20 years, with 7% annual returns:

• Fund with 1.4% expense ratio: $297,000
• Fund with 0.17% expense ratio: $375,000

Go abroad for stocks. Despite the widespread slowdown, the economies of many countries are likely to outpace the U.S over the long run. 

"For those who can stand the bumps, emerging markets are likely to grow faster than developed markets; and Europe, now selling at a 30% discount, will eventually come back," says RegentAtlantic investment adviser Chris Cordaro. 

... And do the same for bonds. The average yield for emerging-market bond funds is 5.4%, more than triple the current yield on a 10-year Treasury note. 

Sound risky? Many emerging-market economies are in better shape than the U.S. and Europe; emerging markets also have better growth outlooks. 

Shift 5% to 10% of your bond portfolio toward them through T. Rowe Price Emerging Market Bond Fund (PREMX), which has a 6.4% current yield, suggests Jeff Layman, chief investment officer of BKD Advisers. 

A Money magazine reader weighs in: Go with what you know.

"I buy stocks only in companies whose business I can easily understand. This served me well with Electronic Arts (I'm a gamer), Crocs (wear them all the time), and several railroad companies (I think fuel prices will make rail transport more popular)." -- Kevin Banks, Dunwoody, Ga. 

Become a landlord. It's now cheaper to buy homes than rent in 98 of the top 100 metro areas, Trulia.com reports. 

"And the outlook is that we're more likely to see appreciation in the next one to five years," says Frank Nothaft of Freddie Mac. Plus, you can see returns of 5% to 10% from rent over a five- to 10-year hold, says Robert Griswold, co-author of "Real Estate Investing for Dummies" 

Favor dividend growers. Most income investors today are focused on current yield.

A better metric? Dividend growth. Companies that consistently raise payouts outperformed those that don't by 1.4 percentage points a year over the past five years, Ned Davis Research found.

Get growth through SPDR S&P Dividend ETF (SDY), which tracks stocks that hiked yields every year of the past 25. 

Get a hunk o' junk. Total bond market indexes don't include high-yield bonds, which are less sensitive to rising interest rates than other debt. 

Junk bonds are also delivering 7.8% yields right now, 6.5 percentage points higher than a 10-year Treasury.

Investment adviser Jeff Layman suggests putting 10% of your bond allocation into them via Artio Global High Income (JHYIX), which is yielding 7.5%. 

Hedge inflation. Keeping too much in cash could leave you behind consumer-price increases, particularly with interest rates on savings at 0.13%. 

I-bonds can protect you. Rates adjust twice a year based on the CPI. "And you're guaranteed to at least match inflation," says Boston University econ professor Zvi Bodie. The current rate is 2.2%. You can invest up to $10,000 a year via TreasuryDirect.gov. 

Cherry-pick big growers. The core of your portfolio should be stashed in funds that give you access to all areas of the market. 

The typical way to go for more growth is to invest in the stocks of smaller companies, but those look overpriced today, says GMO chief investment strategist Jeremy Grantham. 

Big blue chips, on other hand, look like decent values. Here are four favorites from Larry Puglia, manager of T. Rowe Price Blue Chip Growth (TRBCX), that are expected to increase their earnings at a decent clip. (See 7 stocks to rev up your portfolio)

Be passively aggressive. As the graph above shows, few actively managed funds consistently beat their benchmarks. That means for a diversified portfolio, you'd to have to pick right a bunch of times. Good luck with that. Instead, put the bulk of your money in index funds and ETFs from the MONEY 70 that cover the market, then invest the rest in managers you think have the goods.

Make your job really pay

(Money magazine) -- Earnings are a predictor of wealth, so you'll want to raise your ceiling. 

Take work on the side. Moonlighting can really pay off. Seasoned business analysts commanded $50 to $90 an hour for temp work in the first quarter of 2012, depending on the region, according to IQNavigator. 

Software developers got $78 to $107 an hour. Put in an extra 15 hours a month on freelance projects at even $55 an hour, and you'll gross nearly $10,000 more a year. 

Become a bonus baby. Two-thirds of managers and nearly half of exempt salaried employees got bonuses in 2010, with median targets of 20% and 10% of salary, respectively, reports WorldatWork. 

Getting in on the plan may be a factor of title, so nose around to see if others at your level get the bonus and what they had to do to achieve it. 

Related: Basic steps for building up your wealth

Once onboard, aim to save 70% of incentive pay, says New Jersey financial planner Saul Simon of Lincoln Financial Advisors. You'll see nice gains in net worth in just a few years. 

Throw out the first number. People who negotiate starting salaries end up with an average $5,000 more than those who don't, according to a 2010 study. 

By talking a salary up from $70,000 to $75,000, someone who got annual increases of 3% would earn $134,352 more over 20 years.

Basic rules for getting rich

In achieving wealth, how you invest isn't nearly as important as how much you save.

Say you're 40, have $200,000 saved, with 60% in stocks, and are putting away 10% of a $100,000 salary (including company match). You have a 52% chance of retiring with 70% of your pre-retirement income, according to T. Rowe Price.

Boost your stock stake to 80%, and your chances improve modestly, to 57%. But if you boost your savings to 15% instead, you get to 69%.

Message: Stretch to save the most you can.

Make saving a habit

Regular savings is one of the surest ways to increase your net worth.

This is part of a special report on 101+ ways to build wealth. In this story, readers and experts weigh in with advice for significantly boosting your savings.

Stick to a budget for just a month. A Canadian study found that people who stuck to a budget had higher net worth than those who didn't have one or had one they didn't follow.

Know you can't commit to a lifetime of constraint? Financial planner Sean Dowling of Stamford, Conn., suggests focusing on your biggest spending problem area and tracking it with Quicken for just a single month. Then set an attainable goal for the following month -- like one latte out for every two drip coffees at home.

Then bump up savings for the next three. Studies show that it takes about 66 days for repeated behaviors to become habits.

So tell yourself you're going to try to bank your latte savings for three months or so to see if you can manage without the cash, leaving yourself the option to reevaluate once the trial run is over.

"Most people find that their budget naturally adjusts," says T. Rowe Price Investment Services financial planner Stuart Ritter.

Restore equilibrium regularly.

A Vanguard study spanning 1989 to 2009 showed that regularly rebalancing a portfolio to target stock and bond allocations increased returns, on average, by 0.5%. To get similar results, rebalance when your target allocation strays more than 10%. The reason it works is classic: You're essentially buying low and selling high.

Hammer the message home. A 2010 study showed that people who received monthly text messages from their bank about their savings goals put away 6% more than those who didn't. For savings above what you've automated, set up alerts on your phone.

Find a carrot ... or a stick. Dean Karlan, an econ professor at Yale, has found that commitment contracts help people stay on track to reach their savings goals.

So enlist a buddy to hold you accountable, and allow yourself rewards (say, a massage) for successes along the way.

Or, if the carrot approach doesn't do it for you, use stickK.com. You input your goals and authorize the site to charge a certain amount to your credit card -- then send it to a person or organization of your choice, like a political candidate you hate -- if you fail to hit your target.

Put away your raises. Each time you get a bump up in your salary, dedicate a portion of that extra pay -- say, half -- to increasing retirement contributions or other savings.

If a 35-year-old starts out saving 6% of his income for retirement and then puts half of his 3%-a-year raises toward his 401(k) for the next five years, he'd be at a 15% annual contribution rate at the end of that period, assuming he also gets a 3% company match. That rate would allow the saver to maintain his lifestyle over a 30-year retirement -- even if he went on shopping sprees with all his subsequent raises.

Auto-escalate your 401(k). Don't count on your good intentions to put that raise away. Some 40% of plans let participants set retirement contributions to increase annually, reports Aon Hewitt; take advantage!

Money readers weigh in: Pay the mortgage, even after it's erased. 

"When we paid off our home, I opened a new savings account, and every month since, I have deposited the same amount into it that I used to use to pay the mortgage. Now we have $20,000 in the account." -- Nona Cervenka, Chicago

5 Easy Fixes For A High Summer Electric Bill

Summer has arrived and as the temperatures begin to soar, many consumers can expect their electric bill to do the same. As the hot weather sets in, air conditioners will be working on full blast effectively sending a reasonable electric bill through the ceiling. While there are many ways to reduce your electricity usage, from upgrading to energy conserving appliances to selecting premium grade windows, these are not options that a cash-strapped consumer can readily use. There are some easy and affordable ways to reduce your summer energy bill without having to shell out big bucks on home upgrades. Here is a look at how consumers on a budget can lower their high summer electric bill.

Use Heavy Drapes on WindowsA method that is frequently used to keep heat in during the winter time, can also effectively keep the chill from the air conditioner in the house during the warm summer months. Hanging heavy drapes in front of windows will help keep the house cool by not letting the glaring sun warm up the house. Depending on how many windows you have in your house, installing heavy drapes can be an effective way of keeping your house cool. If buying drapes for all of the windows in your home is too expensive, you could opt to hang them in the areas of your house that get the most sun exposure.

Use Energy Saver Option on Air ConditionerWhen you are not at home, use the energy saver option on your air conditioner rather than turning it off. The energy saver will keep your house at a cool temperature. If you turn off your air conditioner the temperature in your house will rise, and when you turn the unit back on it will need to work harder to cool your house down again, in turn rising your electric bill. Additionally, if your air conditioner has seen better days, it is likely that it is not as energy efficient as some of the newer models on shelves today. If money allows, it may be wise to upgrade your air conditioning unit before next summer arrives.

Recall the Fire Safety Warning "Heat Rises"As children, we are taught that heat rises. If you have an air conditioning unit running on the first floor of your home, you could help keep your house cooler by shutting all of the doors on the second floor. The less space your air conditioner needs to cool, the quicker and easier it will do so. By stopping the airflow to certain areas of your house, you are helping to reduce your electric bill in a big way.

Ceiling and Window Fans Go a Long WayWhen you're trying to save money on your electric bill during the summer, it is wise to limit the use of the air conditioner to extremely hot days. Fortunately, ceiling fans and window fans do not use nearly as much electricity as an air conditioning unit does. Well placed fans can keep cool air circulating in the house, and keep your home from feeling like a sauna. If you do not already have them installed in your home, consider purchasing ceiling fan units. Install a unit in each of the bedrooms to keep air circulating as you sleep.

Lights off During the Day TimeA simple way to conserve energy and lower your electric bill is to turn off all of the lights during the day. If the weather permits, open the windows and allow natural light to shine in, instead of keeping artificial lights on all day long. This move will help reduce your electric bill significantly by reducing your electric use during the day, and keeping your home cool in case you need to turn on your air conditioner later.

 

The Bottom LineSaving money on your electric bill is easy when you know where to make cuts. There are some simple and cost-effective ways to reduce your energy use during the summer months. You can drastically reduce your energy bill during the hot summer months by limiting your air conditioner use, installing thermal drapes and using fans to maximize the ventilation in your home. A high electric bill can be a source of great stress for many struggling consumers. This summer, don't fret over a costly energy bill and find ways to reduce your bill instead.