Plan to Get Rich

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In the real world, people don't just get rich and stay rich. Those who do find money falling into their laps, either through inheritance, lottery winnings, or world-class celebrity, often lose their wealth because they can't manage it. If you want to get rich and stay that way, you need a plan. A solid plan. One that's time-tested, battle-hardened, and likely to last for decades.

After all, unless you're already rich, you've got to claw your way there. It takes time, effort, and as much money as you're able to put to work for you. As an investor, you need three solid parts in your plan to build wealth:

• Seed capital to get started.
• Effort to make things happen.
• Time to turn dreams into reality.

Put them all together, and you'll be well on your way to success.

Find the cash
The first step is to come up with enough money to get started. Unfortunately, finding seed capital just might be the hardest part of getting rich. Life certainly has a way of getting in the way of all our best-laid plans. Probably the best way to even have a shot at coming up with a decent bankroll is to hide a portion of your paycheck from yourself, every payday.

You never miss what you never realized you had. If you direct a portion of your pay to a savings account or anything other than your primary, ATM-linked checking account, you'll have a better shot of not spending it. If you absolutely can't come up with any cash today to start, just make it a point to hide a large chunk of any raises you get. Once you get over the initial hump of getting started, you'll definitely be glad you did.

Deploy it well
Once you've put cash away, congratulations. You've gotten past the largest hurdle. The next step is simpler -- putting that cash to the best possible use. That's where value investing (which we preach and practice at Motley Fool Inside Value) can come in handy. Simply put, value investors look to buy $1 worth of a stock for $0.80, $0.65, or even $0.50, thereby trading hard-earned cash for something worth even more.

It's a straightforward concept. And amazingly enough, it's one that the market offers up to investors every single day. Probably the simplest way to see this in action is to look at companies trading below their book values. Book value is an accounting convention that tries to approximate the liquidation value of a business -- assuming the company is under no pressure to unload its assets.

My rule of thumb is this: Virtually any currently profitable company that is expected to stay that way deserves to trade for at least its book value. Otherwise, someone else could swoop in, buy out the business for less than the cost of building it from scratch, tear it apart, and redeploy the resulting cash elsewhere. Of course, not every company meets that test. Here's a list of companies that recently traded below their book values:

Company	Recent Price Per Share	Recent Book Value Per Share	TTM* Profits
LaBranche & Co. (NYSE: LAB)	$10.04	$13.74	$115 million
Conseco (NYSE: CNO)	$20.22	$26.62	$130 million
Vishay Intertechnology (NYSE: VSH)	$13.60	$16.41	$140 million
UnumProvident (NYSE: UNM)	$20.69	$22.17	$272 million
TD Banknorth (NYSE: BNK)	$32.19	$36.21	$311 million
Standard Pacific (NYSE: SPF)	$25.85	$28.91	$377 million
Avis Budget Group (NYSE: CAR)	$22.08	$25.06	$416 million

*Trailing 12 reported months. Data from Capital IQ.

At these prices, the market is essentially claiming that these companies are worth more dead than alive. In some cases, that may well be true. LaBranche, for instance, is seeing its core business erode as the stock market becomes more automated and electronic. It may well be a value trap, rather than a legitimate value. In other cases, such as with Avis Budget, a complex corporate breakup looks to have hidden the company's true value from investors. And in still others, nasty -- though potentially curable -- problems like the fraud case overhanging UnumProvident send investors running for the hills.

Finding potential values with a stock screener is easy. Separating the true values from the value traps takes some serious business analysis. No company gets value-priced unless something looks seriously wrong with it. It takes a good bit of due diligence to weed through the news and unlock the truth behind what's happening.

Patiently profit
After you identify and buy a legitimately cheap company, value investing gets ridiculously easy. All you have to do is wait. Wait for the market to realize its valuation mistake. Wait for the company's business to return to normal. Wait for the issues to get cleared up. Over time, the temporary problem that knocked the stock down into value territory will get resolved. Once that happens, the pressure will be off, and the shares will rebound. As a shareholder who bought in when things looked their worst, you can profit handsomely from those rebounds.

Get started now
A little bit of money. A little bit of work. And a little bit of time. Those are the key ingredients to outperforming the market. If you're ready to launch your plan to get rich, join us at Inside Value. Think you can do it on your own? That's fine, too. We'll even help you get started. Click here to take 30 days to build your own plan, for free.

Today's a good day to join us -- our latest issue was just released, with two new value-stock recommendations. A 30-day trial of Inside Value is free and gives you full access to the lineup of undervalued stock opportunities, our discounted cash flow calculator, and our community discussion boards.

At the time of publication, Fool contributor and Inside Value team member Chuck Saletta owned shares of Avis Budget Group. The Fool has a disclosure policy.