NOTE: This post is NOT financial advice. Rather, it’s my relating of some interesting stories that my tax accountant told me.

Every March I have my annual meeting with my tax accountant. The meeting lasts 30 minutes. In the first 15, we go over my numbers and in the last 15 he tells me stories about various investments he has been in, some of which made him a lot of money and some of which lost him a lot. I’ve noticed that one thing almost all his losers have in common is the absence of due diligence on his part. I always find the last 15 minutes exhilarating. Here’s a guy who has an Associate degree from the local community college, is a few years younger than me, and has a net worth in the 8 figures. Talking to him is far more exciting to me than talking to the average academic economist.

So each year I tell him that I would like to take him out for a nice meal and pick his brain. Each year I don’t. This morning I did: the only time he could make was breakfast.

He told me stories about various people he’s known over the years and has noticed a pattern in those who build a nice fortune and those who don’t. He did so this morning and said that there are three key elements that all the successful ones had in common. “I know one,” I said, “diversification.”

“No,” he said, “that helps, but that’s not it.” The three he named are:
(1) Don’t have a lot of overhead. Don’t commit to a large rent. Don’t have a large mortgage or, if you do, pay it down quickly.
(2) Be “footloose.” That is, be able to adjust quickly when things go bad. So, for example, he told the story of a friend who was doing well but then had his rent on a municipal property jacked up by a local government that saw that he was doing well. His friend didn’t renew the lease but went elsewhere quickly.
(3) Take advantage of–and maximize if at all possible–all of the tax-advantaged ways of saving that you have access to: max your 401(k), max your Roth, etc. He told of a man who worked for a large company and who, over his working life, maxed his 401(k) and now has $1.4 million in that account alone.

His stories and thinking reminded me of the spirit and, to some extent, the letter of Dwight R. Lee’s and Richard B. McKenzie’s excellent book, Getting Rich in America: 8 Simple Rules for Building a Fortune and a Satisfying Life. As I said in my review of the book in the Wall Street Journal, their book “is the how-to handbook for becoming the millionaire next door.”

I’m willing to bet–call it a hunch–that most people, if asked to name someone who they think is a humanitarian, would not put a tax accountant who makes a lot of money high on their list. But I’ve gotten to know this one over about 25 years and, with his careful thinking about how to make and keep wealth, thinking that he seems willing to share with those who will listen, my accountant is a true humanitarian.

Here is a note from my tax accountant referred to above, after he saw this post:
“One correction. I never did get my AA. I dropped out to pursue my golf. Never made it as a pro. Enjoyed our breakfast.”