I love a good biography. Some favorites include Life and Death in Shanghai, Appetite for Life, and Truman. I'm afraid that my own life (so far) pales in comparison to these remarkable lives. Still, I think I can offer some useful financial guidance with a look back at my financial life. (After all, despite the many mistakes I've made, I did succeed in turning $3,000 into $210,000. My journey has been one of frequent improvement.)

Entering the working world in my early 20s after college, I always kept my spending in check. I made sure to not spend more than I had, and I slowly watched the balance rise in my checking account. Score one for Selena. But while this is a laudable achievement, it's not enough -- if you want to get rich.

Fortunately, while working at a university, I discovered retirement savings accounts. I was soon plowing as much as I could into a 403(b) plan (the nonprofit and educational equivalent of a 401(k) plan). My good situation had just gotten better. The downside? As many people do, I didn't pick the best mutual funds in the plan in which to park my money. It grew, but not as rapidly as it might have.

More, more, more
I was soon aiming higher. I went to business school, leaving my retirement account to keep growing. (Many people empty their 401(k) accounts when they change jobs -- not a smart move.) By going back to school, I was hoping that I'd end up in a higher-paying job, which would permit me to save more, invest more, and even spend more.

I next discovered the stock market. In the most irresponsible manner, I bought my first stock -- Broderbund Software -- because I expected success from its "Where in the World Is Carmen Sandiego?" game. I never did any more research than that, other than looking up its ticker symbol. Fortunately, the pick was a good one -- the stock increased significantly before the company was bought out.

I then began investing more carefully. For one thing, I discovered The Motley Fool (this was back in 1995!). Perhaps ironically, I ended up learning much more about investing from the Fool than I did from business school. I discovered the P/E ratio, profit margins, return on equity, and all that. I made spreadsheets and tracked lots of stocks. I also invested in many companies, often selling some after a few months, in order to be able to buy some others that had caught my eye. I screened for this, and screened for that.

As an example, to find some stalwarts trading at a reasonable price, I might have screened for stocks with net profit margins of at least 10%, P/E ratios of no more than 25, and market caps greater than $10 billion. Such a screen recently yielded companies such as:


Market Cap

Net Margin



$60 billion



Altria Group (NYSE:MO)

$176 billion



American Express (NYSE:AXP)

$72 billion



General Electric (NYSE:GE)

$368 billion



Harley-Davidson (NYSE:HOG)

$19 billion



Illinois Tool Works (NYSE:ITW)

$27 billion



Nokia (NYSE:NOK)

$84 billion



As you can see, screening can help you find some attractive ideas. But it's not enough to just look at a few factors. Overall, this wasn't a great strategy for me, getting in and out of a few companies quickly on the basis of a few numbers. I often lacked a good understanding of what the company actually did, and how it made its money.

As time went on, my investing evolved. Despite my many blunders, I could see that some of my best investments had been ones where I left my money to grow for years in strong companies. I started trading less. I winnowed my holdings down to a more manageable number. I started building a dream portfolio, consisting largely of wonderful blue-chip companies that I could see myself wanting to own for years, if not decades.

The promised land?
And most recently, my investing has taken yet another turn. I've been adding a lot of mutual funds to my portfolio. My blue chips are still there, along with a few other stocks I add in small measures now and then. But I'm finding great satisfaction in leaving much of my money in the hands of savvier investors than myself. Forgive me for this commercial plug, but the resource I've found most helpful in this regard has been our own Motley Fool Champion Funds service, which has introduced me to many terrific funds with strong track records, low fees, talented managers, and great promise. Its picks are beating their benchmark indexes by some 10 percentage points.

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In sum
Wrapping up, I hope you see that although you may be doing some things right, as I was in my early working days, there's always room for improvement. Why have thousands of dollars sitting in a checking account when they could be growing more effectively in CDs, stocks, and mutual funds? Why trade frequently, when you can simply buy into some great companies and patiently wait to be rewarded? Why spend hours on half-baked stock analysis when successful professionals are waiting to invest your money for you?

Here's to an even richer tomorrow!

Longtime Fool contributor Selena Maranjian owns shares of 3M. For more about Selena, view her bio and her profile. 3M is an Inside Value recommendation. The Motley Fool is Fools writing for Fools.