Remember the Underpants Gnomes

Years ago, I wrote a piece based on a "South Park" episode that featured gnomes stealing underwear in order to get rich. Phase 1 of their three-part plan involved collecting underwear. Phase 3? Profit! The gnomes didn't seem to realize that Phase 2 was missing. They had no idea how to turn their growing mountain of underwear into wealth.

Like the gnomes, sometimes we invest in companies that seem to have exciting first and third phases. Crocs, for example, made and sold comfortable footwear as its Phase 1. Many investors have imagined big bucks as its Phase 3. But in between, the company has experienced growing losses and a deteriorating balance sheet, making Phase 3 much less of a shoe-in. Similarly, Sirius XM Radio (NASDAQ:SIRI) has also caused many investors grief, and my colleague Philip Durell won't be surprised to see more of the same.

How's your plan?
Here's another way to think of the gnomes and their underwear: Think of your personal financial plans. That's right -- your retirement plans, for example, or perhaps just your general investing plans. Do any of the following look familiar?

Sadly, the examples above are all too common. These folks aren't just sitting around doing nothing -- they're simply not doing enough.

Saving money is a wonderful practice, but if you're simply plunking your pennies in a savings account, you're probably not earning anywhere near the return you could get from CDs, money market funds, or especially stocks. Opening an IRA, especially a powerful Roth IRA, is a great first step -- but to get rich, you'll need to keep contributing money, and invest that money well, for years to come. Same goes for opening a brokerage account, even if you just plunk the money into a solid index fund.

And if you'd rather load up that brokerage account with fast-growing stocks -- say, candidates such as these:

Data: Motley Fool CAPS.

… well, that's all well and good. But you'll have to remember to actually do your homework, follow through, and buy the stocks that look best to you. You might also want to balance out that speedy growth with a few reliable dividend-payers such as Waste Management (NYSE:WM) and Vodafone (NYSE:VOD).

Even a subscription to a service such as our Rule Your Retirement newsletter won't automatically guarantee you long-term wealth. We're happy to give you valuable advice -- but it's up to you to implement it properly.

The bottom-line lesson here is clear: Your path to financial success is more than a beginning and an end. The middle is every bit as important. Remember the gnomes and their pile of underwear, and make sure your plan to get rich isn't leaving out any important steps.