MAKE YOURSELF
A MILLIONAIRE
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MAKE YOURSELF
A MILLIONAIRE
How to Sleep Well and Stay Sane
on the Road to Wealth
Charles C. Zhang
with Lynn L. Chen-Zhang
McGraw-Hill
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Copyright © 2003 by Charles C. Zhang and Lynn L. Chen-Zhang. All rights reserved.
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Mitchell and Alex.
DISCLAIMER
While the information in this book is believed to be accurate, distribution
of this material should not be considered an endorsement of any particular
investment strategy, product, or service described herein. This information
is being provided only as a general source of information and is not
intended for use as a primary basis for investment decisions, nor should it
be construed as advice designed to meet the particular needs of an individ-
ual investor. Please seek the advice of your personal accountant, attorney,
or tax and financial advisors regarding your particular financial concerns.
In addition, please note the following:
■
Mutual funds are offered by prospectus only. For more information
about individual mutual funds, including fees and expenses, ask your
financial advisor or product provider for a prospectus. Read the
prospectus carefully before you invest or send money.
■
Loans and withdrawals from an insurance contract may generate
income tax liability, reduce available cash value, and reduce the
death benefit. Negative performance in the underlying subaccounts
of variable insurance products may impact the death benefit. Refer to
your individual contract for applicable provisions. Guarantees issued
by insurance companies are based on the claims paying ability of the
issuing insurance company.
■
Stocks of small or midsized companies are generally subject to
greater price fluctuations than large-cap stocks.
■
International investing involves some risks not present with U.S.
investments, such as currency fluctuations and other economic and

10 Make April 15th Your Favorite Day 169
11 Guarding Against the Financial Pitfalls of Death 197
vii
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Copyright 2003 by Charles G. Zhang and Lynn L. Chen-Zhang.
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viii
CONTENTS
12 Financial Suits of Armor 217
13 Why You Shouldn’t Count on the Government’s Help for
Your Retirement 245
14 Where Do You Want Your Money to Take You Today? 279
15 You Can’t Take It with You 315
Glossary of Financial Terms 335
Index 341
Copyright 2003 by Charles G. Zhang and Lynn L. Chen-Zhang.
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ACKNOWLEDGMENTS
W
e owe a debt of gratitude to many people for
this book. But our deepest gratitude goes to
Jennifer Eritano, our assistant and friend, who
devoted her time and talent to make this book
possible. Without her, this book would have
never been completed!
A big thank you goes to our editor, Steve Isaacs of McGraw-
Hill, for his guidance and patience, and to Sally Glover for her great
editing work. Our undying gratitude also goes to the leaders and
staff at American Express, especially Ken Chenault, Jim Cracchiolo,
Brian Heath, Mark Regnier, Rhonda Schwartz, Guinero Floro,

money and riches.
But counting on the stock market to make you a lot of money
very quickly is not only risky, it’s also highly unlikely, especially
1
CHAPTER
Copyright 2003 by Charles G. Zhang and Lynn L. Chen-Zhang.
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now. Plus, if you had known then what you know now (i.e., when to
buy and sell Yahoo! or Microsoft), would you have done what it takes
to become rich off the stock market? Probably not. Buying low and
selling high go against human nature. Just ask the man who bought
Yahoo! at more than $150 per share and watched the share price
plummet to around $12 per share. The meteoric rise of the stock mar-
ket in the 1990s was an abnormality. Will the stock market continue
to go up? Sure, historically speaking over the long term it will. (See
Figure 1.1) But the markets will continue to rise and fall all the time.
Will it skyrocket the way it did in the 90s? No one can say. Investors
today are smarter, younger, and have more time to wait to make the
returns they want. For those who are trying to make their first or their
umpteenth million, today’s market serves as a lesson of hurry up and
wait. This is a road that the average investor just shouldn’t travel
alone. Here’s the first secret that many wealthy people know: Hire a
financial advisor to do some of the worrying for you.
WHAT IS A FINANCIAL ADVISOR, AND DO YOU NEED ONE?
“A financial advisor? I don’t need one. My cousin Tony is a whiz with
investments and finances.” If this is something you find yourself say-
ing, stop. Unless your cousin Tony has taken classes and passed com-
prehensive exams, like the CFP™ boards, and works as a financial
advisor, chances are you don’t want to trust your retirement to him.
Cousin Tony is probably not going to be able to help you decide

Crash
1933 - Bottom of
Great Crash (Dow
Jones at 41.22)
1941 - Pearl
Harbor/U.S.
Declares War
1958 -
Khrushchev
Named Premier
1950 - Troops Sent
to Korea
1961 - U.S. - Cuba Break
1963 - Kennedy
Assassinated
1973 - Vietnam Agreement;
Arab Oil Embargo
1974 -
Nixon
Resigns
1980 - Prime Rate Hits 21%;
Recession Begins
1987 - Stock
Market Crash -
Biggest one-day
decline
1991 - Recession Ends; Gulf
War; USSR splits
1989 - Friday the 13th
Market Plunge; Berlin

rather than applying a cafeteria plan to each client.
At some point in time, everyone will need the help and expertise
that only a financial advisor can provide. They offer a well-balanced
approach to your finances. Let’s face it, you may be too emotionally
involved with your money to manage it properly. You have worked
hard for you money and don’t want to lose it. A financial advisor is
the third party to your financial situation. Just like you wouldn’t per-
form surgery on a family member, why should you perform surgery
on your money?
Recognizing the need for a financial advisor is the first step to tak-
ing control of your finances and increasing your wealth. Selecting the
proper advisor is a harder task. This is a very important challenge. You
need to find the right advisor for your situation. Receiving referrals
from friends or family members is a good place to start. If they are
willing to share the name of their advisor, that means that they trust
him. However, if you are uncomfortable asking or don’t know anyone
who uses an advisor, then you will be starting from scratch.
There are a few things to keep in mind when selecting your advi-
sor. First, don’t be afraid to interview your potential advisor or shop
around. Most planners offer a free initial consultation. This will give
you the chance to sit down with advisors and ask questions. Second,
make sure you feel comfortable with your advisor. During your ini-
tial meeting, gauge how you feel. Did the staff make you feel wel-
come? Do you feel comfortable discussing the most intimate details
of your financial situation with this advisor? Do you think you can
trust this person? If you answer “no” to any of these questions, then
you should probably continue to look for an advisor. Third, make
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THE ChFC AND CLU DESIGNATIONS
Two common certifications that financial advisors earn are the ChFC
and CLU designations. Both the ChFC, Chartered Financial Consul-
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tant, and CLU, Chartered Life Underwriter, can help you analyze
your financial needs and choose the right course for maintaining and
increasing your assets. They have studied the many areas of insur-
ance and financial services and can assist with life and health insur-
ance, estate conservation, etc.
Both designations require comprehensive curriculums of 10 col-
lege-level courses. The ChFC designation also requires an additional
three courses. Extensive education, experience, and ethics require-
ments must also be met. These designations are granted by The
American College, a fully accredited institution in Pennsylvania.
YOUR ADVISOR—GOOD OR BAD?
You’ve gone through the interviewing process with a number of
advisors and have picked one. This person seems very knowledge-
able, and you feel like this is a good fit. However, the time may come
when you decide that your financial advisor is just not the right one
for you anymore. That’s okay; it’s perfectly alright to switch advisors
if you feel that your advisor isn’t doing the right thing for you. Here
are some guidelines to help you make your decision:
Do You Understand What Your Accounts Are Doing and What They Are
Designed to Do?

can also be wrong. Rather, your accounts should be based upon your
age, risk tolerance level, and circumstances.
Is There a Lot of Activity in Your Accounts?
Many advisors earn their money through commissions, not only
when you purchase a product, but also when movements are made
within your accounts. Your risk level should determine account rebal-
ancing, not whatever is good for your advisor’s pocket. If you feel
there are excess transactions in your account, talk to your advisor
about it. The only transactions that occur in your account should be
done at your discretion and with your input.
I meet with my clients at least twice per year. This doesn’t mean,
though, that I am changing things in the portfolio at least twice a
year. I rebalance their portfolios only if they need to be. Changing
around your investments more than necessary defeats the purpose of
investing, and may actually cause your portfolio to decrease in value.
What Kind of Investments Are You Involved With?
This relates to your understanding of your investments. Many bro-
kers push certain products known as “proprietary products.” These
are investments that are managed by the firm the advisor is affiliated
with and, thus, will get paid more for. Take a look at your account
statements. Do you see a lot of securities that all have the same name
(i.e., the XYZ Value Fund and the XYZ Growth Potential Fund)? If
so, ask your advisor why you are invested in these funds. They may
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time. He was unhappy with the performance of some of his accounts
at another firm. He asked that we transfer his assets so that I could be
his advisor. This man was out of the country quite a bit for business,
and had given his advisor at the other firm discretionary control over
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his accounts. When we liquidated his holdings at the other firm, he
discovered that one of his poorest performing assets was a Unit
Investment Trust—an investment he didn’t even know he owned! His
advisor had purchased it using discretionary power while the man
was out of the country.
Although this isn’t a complete list of questions, these are the
most important. If you find yourself in doubt about switching, trust
your gut feeling. That will be your best guide.
A WORD ABOUT FEES
There’s an old saying that goes, “It takes money to make money.” In
other words, in order to make some money, you need to be willing to
spend some money. I have had many people come into my office and
ask my advice. While I am more than willing to help my clients and
potential clients, I find it troubling that many people expect financial
advice for free. Financial advisors, myself included, charge a fee for
the services we provide. However, I have encountered people who
are adverse to paying any type of fee for financial planning. They
would rather have the advice up front for free. Would you go to your
doctor or dentist, ask them what needs to be done, and then expect
not to pay? Of course not. Financial planners are professionals just as
doctors and lawyers are. There is a fee for service.
That being said, if you find that you are fee-adverse, think about

one was talking about how much money they had, or didn’t have?
Probably not very recently. While we as a society have discovered
that it’s permissible to talk about the neighbor’s divorce, your sister’s
therapy sessions, or your grandfather’s bout with cancer, no one feels
it’s alright to talk about their financial situation. And, sure, maybe it’s
not the best idea to brag about how much money you’ve saved in
your company 401(k), or that you have thousands of dollars in out-
standing credit card debt, but you’d be surprised at how many people
feel the same way or are in the same situation.
Facing your fears about money is probably the hardest thing
you’ll ever do. But what exactly are you so afraid of? Losing all your
money? Not being able to afford those material things your friends
can? Not having enough? And how much is enough money, anyway?
In order to get control of your money and realize your goal of being
rich, you need to know where you are starting from, and get hold of
your fears.
Sometimes our fear of money is directly linked to a past action
that drives us. For instance, when you were young did you get an
allowance? What did you do with this money? Save it or spend it?
Does your reaction to your allowance connect with your reaction to
your current salary? In other words, do you still find it hard to part
with your money, or are you spending it the minute you get it? By
identifying your money habits, it becomes easier to change the bad
habits. Of course, fear may drive you away from even looking at your
financial habits.
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The only way to eradicate your fear is to replace it with positive

mate how much money you spend monthly, and then compare it to
the actual amount, which number would be bigger? You may find
that you are spending more money each month than you thought.
How does that make you feel? Are you afraid that you won’t be able
to cover your bills? Or, do you feel relieved that you now know what
you are truly spending?
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Write down what your goals and fears are. Come up with a posi-
tive statement about how you will reach your goals, thus crushing
your fears. Although much has been said about the power of positive
thinking, the effects cannot be denied. The more positive your out-
look, the more good will come your way. Think about it. The last time
you were in a bad mood, did you affect those around you so their
moods turned sour, too? Similarly, when you smile at people, the
more likely they are to smile back at you. The more positive your
thoughts are about money, the more good things will happen.
One more thing, it’s important to remember that fears come in
different forms than just self-doubt. Many times family members or
loved ones will instill doubt in us. This may come in the form of,
“Why do you think you can do that?” or other statements along those
lines. Whatever the reason for these statements, don’t let them dis-
courage you. Only you can change the way you think. Keep a smile
on your face and a glint in your eye, because you can become as
wealthy as you want to be. By having a more positive outlook, you