The

Franklin Prosperity Report

‘A penny saved is a penny earned’ December 2009 / Vol. 1, No. 4

12 Commandments for Achieving Super Wealth

Surprising Rules for Life From Ordinary Americans Who Made It Big

We all know about the very richest Americans. Barrels of ink are spilled
detailing the thoughts of NBA stars, Wall Street wizards, and the denizens
of Hollywood and Los Angeles.

Certainly, though, it must be simpler than the luck of being born with God-
given athletic skills, or an extensive network from family or Ivy League
schooling, to succeed in America. Worth magazine founder W. Randall Jones,
in his new book, The Richest Man in Town, set out to find out how real
Americans make their money.

The book grew out of a special anniversary edition of the magazine in which
editors and reporters surveyed the hundred largest towns in America to find
the richest person in each one.

“Our goal was to paint a truly representative portrait of wealth in

INSIDE . . .
Dr. Franklin’s Mailbag............2 diversity that resides in the U.S. populace of
Tips for Tightwads...............10
Diversify Stocks Cheaply......11
Protect Your Name...............13
Sell More Abroad.................14
Get the Freebies....................15
Snoop Out Real Prices..........15
Biweekly Mortgage Trap......16
Home Tax Breaks.................18
Franklin on Business............18
Boost Retirement Payout......20
America,” Jones says. “Too often, we view wealth
and success through the lenses of New York and
Hollywood.” As important as these creative
engines are, they don’t represent the vast
300 million people, Jones notes.
And as interesting as his original project was,
it didn’t include identifying and analyzing
those traits that people who achieve great
wealth have in common. Neither did it distinguish
between those who inherited wealth and those
who created it.
Jones corrected both of these shortcomings in
his book, choosing to include only the self-made
wealthy in research for the book and distilling
what he learned about their commonalities into
what he calls the “Twelve Commandments of
Wealth.”
His goal was simple: to determine the state of
self-sufficient success and wealth creation in
Continued on page 3

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Copyright © 2009 The Franklin Prosperity Report
2 • The Franklin Prosperity Report
Dr. Franklin’s Mailbag
Every month, we ask readers for their best
tips on making and saving money. The amounts
don’t matter; it’s about little changes
anyone can make to keep more cash in their
pockets to save, invest, or spend better
elsewhere. If you have a good money-saving
idea, send it to saving@franklintips.com.
We’ll publish the best ideas in a future
issue.
I buy a Starbucks card and if you register it
online (for free), you can get free refills.
I typically buy one Grande Soy Latte in the
morning for $2.60 and if I get two free
refills throughout the day it amounts to
$0.86 apiece! Using these deals, it’s not
tough to save a $5.20 per day. Per week
that’s $36.40. In a year, I save a total of
$1,893!
– Tiffany Welch, St. Louis, Mo.
I have the money I need to safely pay my
bills put into my checking account and all
the rest put in a separate account through
my direct deposit.  I was able to put a down
payment on my house and actually forgot I
was doing it. It’s easy to save money if you
forget you have it.
– Jack Warsaw, Venice, Fla.
I occasionally purchase designer clothing
online via eBay, where you can find new,
unworn clothing still with tags on. For
example, a designer black velour tracksuit
that would’ve cost a minimum of $300 at
the mall I found online for close to $70.
You have to be careful not to get taken by
those selling phony brand name clothes, but
then again if you can’t tell the difference
between a real and a fake chances are your
friends won’t either!
– Laura Albright, San Francisco, Calif.
I turn off and unplug the computers when I
leave my house. Once I starting doing that,
the power bill went down by $10 to $12.
– Dwayne Ellis, Arlington, Va.
Continued from page 1
America today — and to shed light on what the rest of us can learn from the
richest people in our country. Though Jones was unable to pinpoint the exact
net worth of some individuals, his research indicates that the “poorest”
of these richest people (he refers to them “RMITs”) is conservatively in
excess of $100 million.

“In my journey, I was struck by so many people living the American Dream
that one of the greatest challenges was simply deciding which ones to
interview,” Jones writes. “In the end, all 50 states are represented in
this survey, proving that the American Dream is not only alive and well but
clearly attainable in any town, anywhere in America.”

How does all this research help his readers? It doesn’t, Jones says, unless
they are willing to use it. “Charles Darwin was right, I believe, when he
observed: ‘It’s not the strongest of the species that survive, nor the most
intelligent, but the ones most responsive to change,’” Jones says. “It’s
never too late to change, but you have to be willing to make the effort.”

Here then, are The Twelve Commandments of Wealth, as detailed in the book:

Commandment No. 1: Never Seek Money for Money’s Sake

The first step on the road to riches is to aim to create value, not money.
Strange as it may seem, virtually all of the rich folks Jones interviewed
for this book agreed that seeking money for its own sake is definitely not
even the way to achieve financial freedom, let alone the way to become super
rich. In other words, though these folks all enjoy the freedom that having
money brings, none of them began their careers with the goal of making money!

“RMITs are staunch in their belief that you must first create substantial
value — products or services that enhance people’s lives — before the money
will flow from any enterprise,” Jones says. “Only by creating value will you
ever attract significant wealth.”

This is something biotech billionaire Randal “R.J.” Kirk knows well. Kirk
describes attracting money as “a Zen thing” that happens only when you are
in the process of making worthwhile contributions to society. Though he
finds having lots of money quite agreeable, Kirk sees it as a by-product,
not the point, of work.

“Never do anything for money, period,” Kirk counsels. “If you find something
you really love and that society finds valuable, the money will come rather
easily.” Finding something you really love to do and then doing it to the
best degree of which you are capable, then, is the real key here. And in
order to identify both the work you love and what is most important in your
life, Jones recommends writing your own obituary.

“As morbid as that may sound, it’s one of the most enlightening exercises
I have ever experienced,” Jones writes. “I realized that my life is so much
more than my résumé and considerably more than my bank account. And I began

The Franklin Prosperity Report • 3

 to formulate an idea of how much wealth it would take for me to have the
rich and full life that I envisioned.”

One question Jones says arose repeatedly in his interviews of the super
wealthy was, “What brought you greater happiness — the journey or the
actual arrival at destination success?” Without exception, every person he
interviewed told Jones that he or she had found the chasing the rainbow to
success more valuable and enjoyable than finding the pot of gold at the end.

Commandment No. 2: Find Your Perfect Pitch

One thing Jones found that all RMITs have in common is that they know
themselves well. “Neuroscientists tell us we are all hardwired with certain
aptitudes, talents, interests and inclinations,” Jones points out. “RMITs
seem to know this instinctively.”

What makes self-knowledge so important is that it relieves you from trying

to do things for which you have no talent.

“This revelation is liberating because it frees you to be so much more

of what you innately, intrinsically, instinctively are,” Jones observes.
“Finding your own gifts is the second step to becoming the richest man in
town.”

In order to do this, Jones says it’s necessary to recognize that something

we’ve been told for years is dead wrong. “Did your parents or loved ones
ever say to you, ‘You can do anything you put your mind to’?” Jones asks.

“Brace yourself — they lied to you. Lose the misconception that you can be
anything you want . . . and work on your strengths instead.”

The truly rich don’t try to do things they know they’re not good at.
Instead, they concentrate on using the skills and talents they know belong
to them.

Warren Buffett once told Fortune magazine, “When we got married in 1952, I
told Susie (Buffett’s first wife) I was going to be rich. That wasn’t going
to be because of any special virtues of mine or even because of hard work,
but simply because I was born with the right skills, in the right place at
the right time. I was wired at birth to allocate capital.” Having perfect

W. Randall (Randy) Jones is an author, publisher, and media executive who has spent 30 years in
the publishing, TV, Internet, film and media businesses. He is the founder of Worth, the financial
lifestyle magazine for active, wealthy investors. Jones launched Worth in February
of 1992 and was the guiding force behind its growth to 500,000 circulation in
just three years. Jones’ success with Worth landed him on Adweek’s “Strongest
Performers” list and Folio’s “40 Under 40 Achievers” list. Often regarded as an
industry maverick, he became the youngest publisher of a major magazine in
history when, at age 29, he took the helm of Esquire.

4 • The Franklin Prosperity Report

pitch is indeed a real gift, one you either have at birth or you don’t.
Recognizing your skills and abilities is a gift, too — one you must give
yourself if you’re serious about becoming truly rich.

Commandment No. 3: Be Your Own Boss

Hire yourself and you control your business and the direction of your life.
Work for someone else, and you give away that control. Ninety-four of the
hundred rich folks Jones interviewed not only own their owned businesses
but also founded them. Working for someone else tends to make people risk-
averse, and taking responsible risks is a necessary ingredient of making
it big.

The perceived safety of a steady paycheck comes with a high price. The
average net worth of self-employed people was an impressive $1.3 million,
more than six times the net worth of the average worker, according to a
2007 report from the Federal Reserve.

Wealthy people are so averse to working for others that fewer than 10
percent of those Jones interviewed have taken their companies public:
Answering to Wall Street is not in their nature. For instance, five years
after Archie “Red” Emmerson, the second-largest landowner in the country,
took his company Sierra Pacific public in 1969, he took it private again.
“I just like to work for myself,” Emmerson says.

In addition to keeping their companies private, RMITs prefer to self-finance

their enterprises whenever possible. Unfortunately, new investors call the
shots more often than not — and the providers of that fresh capital, not
the inventors or creators, are the ones who get massively rich when an
enterprise succeeds. Sole or majority ownership is essential to becoming
the richest man in town, Jones’s research reveals.

Commandment No. 4: Get Addicted to Ambition

Once you identify your strengths, find what you love to do, and start your
own business, it’s time to become addicted to ambition, according to Jones.
“All the self-discovery in the world is useless if you don’t have the desire
or ambition to become the richest man or woman in town,” Jones writes.
“There is no wealth without ambition. Much effort equals much prosperity.”

Billionaire investor Carl Icahn (the only one of the 100 people interviewed
for the book who described himself as a workaholic) believes you have to
be obsessive to be successful but, he adds, when you find work you enjoy
doing, work is therefore enjoyable. Convenience store and casino king Phil
Ruffin summed it up this way: “You’ve got to work hard, you’ve got to love
work, and you’ve got to have fun doing it. You can’t sit around and go to
the beach. You’ve got to have high-octane ambition.”

Though rich people report that the level of their parents’ ambition influenced
them, that influence wasn’t always positive. “My father was known for his
skills and was indeed highly respected, but he was never able to turn that

The Franklin Prosperity Report • 5

 respect into capital — personal wealth,” says real estate tycoon William
D. Sanders. “I always wanted both — respect and wealth. I never saw them
as contradictory in any way.”

The qualities of persistence, diligence, work ethic, and self-belief are not
genetic traits doled out to only a select few, Jones points out. Anyone can
develop and cultivate them, and RMITs often do so in especially interesting
ways. For example, Bob Stiller, founder of Green Mountain Coffee, pays close
attention to the power of visualization, cutting pictures of what he wants
from magazines and keeping the pictures where he will see them everyday.
Though he began as a teenager with a picture of a car, Stiller now chooses
pictures that represent what he wants his company to achieve. “The amazing
thing is, the things I have visualized have come to me,” Stiller says.

Hard work for hard work’s sake is not the point, either. Pete Nicholas,
co-founder and chairman of Boston Scientific, points out that ambition has
its limitations. “Generic ambition without a sense of purpose will not
take you very far,” Nicholas says. “You’ve got to have conviction around a
single idea that you believe in so intently, you can’t envision anything
but greatness coming from it.”

Hartley Peavey, founder of the Peavey Electronics, emphasizes the power of

a single idea. “If you chase two rabbits, both will escape,” he says.

Most people, Peavey notes, do just enough work to keep from getting fired.

“I spend a lot of my time encouraging the people of Peavey to rise to their

greatest level, to dare to be different,” Peavey says. “Maybe 3 percent of
the people get the message and internalize it. The others are just warming
the chairs.”

Commandment No. 5: Wake Up Early, Be Early

Start young when you’ve got more energy and less to lose, the rich advise.
Risk only increases with age. Indeed, a common trait of all RMITs is their
early work experience. R.J. Kirk began selling greeting cards door-to-door
when he was nine. Checks Into Cash founder W. Allan Jones had a paper route
when he was in sixth grade, getting up at 4 a.m. to deliver the Chattanooga
Times to the 81 homes on his route. “I failed the sixth grade . . . twice,”
Jones acknowledges. “But I never missed a day of work.”

Whether they began their work lives delivering papers, mowing lawns, or
working on the family farm, today’s rich didn’t just think about their
futures. They got out and started marching toward it.

RMITs don’t put off until tomorrow what could be done today, and they are
scrupulously punctual. Ninety-eight percent of those Jones interviewed
cited the ability to show up, and show up on time, as being integral to
success.

“Procrastination is really just the fear of success,” says drugstore chain

6 • The Franklin Prosperity Report

founder James I. Harrison. “Success is difficult. It carries with it huge
responsibility, so it is far easier to put off responsibility than it is
to accept it.”

Though early work experience counts for much among the truly rich, a fancy
education doesn’t. Only 10 of those Jones interviewed attended Ivy League
schools, and most attended state universities near their hometowns. Three,
including Microsoft Founder Bill Gates, were college dropouts, 14 didn’t
attend college at all, and one went to a community college.

“Finish your degree so you can start your education,” Oak Park investment
firm head Jim Oelschlager advises wryly, and expose yourself to “collateral
learning,” which he defines as “learning that occurs when you go someplace
to learn something and end up learning something else.”

Commandment No. 6: Don’t Set Goals — Execute Them

Having goals is important, say the successful, but executing them is
crucial to success. “Just get up every day and do the best you can that
day,” counsels Enterprise Products Partners Co-founder and Chairman Dan
Duncan. “Daily incremental improvement is the surest path to great success
and great fortune. You’ve got to be able to execute every day.”

Venture capitalist Josh Kopelman says he sees 2,000 business plans a year,
and that they all became obsolete the moment their owners pressed the
“print” button on the computer. Ideas, Kopelman says, are not what separate
winners from losers — instead, it’s the ability to adapt to change and to
execute in a constantly changing environment.

Carlyle Group co-founder David Rubenstein’s first piece of career advice is

don’t plan your career. “The obsession with goal setting and worrying about
your future will only take your eye off the ball,” says Rubenstein, who
favors a process of making daily improvements while always remaining open
to new and profitable opportunities. “Life is not an organization chart.
Life is more like a spider’s web. Things happen in strange ways.”

However, everyone should have one silent goal, preferably one that’s life-
altering, even world-changing, Jones says. “Silent goals do allow you to
build architecture in your mind of what could happen if everything were to
go right,” he writes. “This sense of never being totally content — knowing
that there is more to be achieved — is typical of the RMIT thought process.”

Commandment No. 7: Failure Is Not Fatal

The only way to succeed is to have the courage to fail and to fail publicly,
the rich concur. Big successes always entail taking big risks, and some
of those risks are bound to turn out negatively. However, every wealthy
person knows that failure is not fatal, so they are not afraid of it. Fear
of failure, instead, is the greatest impediment to achieving your dreams.

“Hope that you fail and hope that you fail early,” says Rubenstein. “Nobody

The Franklin Prosperity Report • 7

 has uninterrupted success . . . and those who have too charmed a life early
in the first third of their life more likely than not will not be stars in
the next third of life, or certainly the final third.”

Since childhood, most of us have been brainwashed with the maxim, “If at
first you don’t succeed, try, try again.” That childhood programming should
be heeded, Jones says. Most of the people in his book have suffered multiple
failures, simply because their willingness to take more risks increases the
odds of failing. The difference between them and less successful people who
fail is that RMITs are among the most resilient people on earth.

That’s why billionaire Andy Grove, former chairman of the board of chipmaker
Intel, wrote his book, Only the Paranoid Survive. “Every leader will
eventually reach a nightmare moment — when massive change occurs and a
company must, virtually overnight, adapt or fall by the wayside,” Grove
says. “When (such a) strategic inflection point rears its ugly head, the
ordinary rules of business go out the window.”

Commandment No. 8: Location Doesn’t Matter

RMITs are best described as the rooted rich, Jones says, because they make
their fortunes in the same places as they make their homes.

Think of Wal-Mart founder Sam Walton, who lived his entire life in Arkansas.
No bright lights and big-city buzz for him, just billions and billions of
dollars and virtually unparalleled success.

The fact is, success is what you make, not where you make it. You can build
a billion yourself in any town in the country.

Commandment No. 9: Moor Yourself to Morals

Fortunes made without a moral compass are destined to disappear like
mirages, Jones notes. “For a time, Enron created colossal wealth, but look
at the catastrophic costs: suicide, death, or for the lucky ones, jail
time,” Jones writes, adding that cultivating a Golden Rule mentality is the
best insurance policy against moral turpitude.

In order to prosper permanently, you must keep a spotless reputation, RMITs

agree. Reputation has many constituencies and many masters — employees,
investors, customers, bankers, suppliers, even competitors.

“People have got to like you, love you, and respect you,” says Buzz Oates,
founder of the largest commercial real estate and management company in
Sacramento. “Your reputation is your most valuable asset.”

Commandment No. 10: Say ‘Yes’ to Sales

Get over the hackneyed images of used-car and time-share salespeople, Jones
counsels. Nothing happens until somebody sells something, and if you are
not proud of whatever it is your company sells, no one else will be proud of

8 • The Franklin Prosperity Report

it either. The fact is, great wealth requires great sales skills. “While I
may have gone to med school to become a doctor, I graduated a salesperson,”
says Dr. Tom Frist, who founded the Hospital Corporation of America.
“Selling the concept of better healthcare for all has been my mission, my
passion, and my wealth-creation mechanism.”

All great salespeople know, often intuitively, that having a high emotional
quotient is far more important to success than having a high IQ. Highly
developed people skills, often huge personalities, and persuasive natures
make them great RMIT material. Enhancing your own “emotional” quotient is
simple: Just become a good listener.

“Knock long enough and the door opens,” says former Clemson linebacker
and communications entrepreneur Leighton Cubbage. “And once you’re through
that door, treat your clients like kings and queens.”

Commandment No. 11: Borrow From the Best

RMITs know they don’t have all the answers: They are constantly on the
lookout for opportunities to learn from others. This is probably why so many
of the world’s richest people love reading biographies. They learn both
from reading about Napoleon’s mistakes at Waterloo and from Eisenhower’s
D-Day success.

They also borrow ideas from the best. “I came from nothing,” says hotel
magnate Gary Tharaldson, who builds an average of 25 new hotels a year.
“I like to borrow an existing concept and make it better. I found you
could duplicate a concept, make it even better, and create one hell of a
business.”

Commandment No. 12: Never Retire

Because they define success as loving what they do and enjoying the journey
to success, it’s hardly surprising that rich people view retirement much
as they view death. “I want my tombstone to read, ‘This Is His Last Real
Estate Deal,’” says Phillip Ruffin. “There is always another mountain to
climb, another deal to do, another party to attend.”

Eschewing retirement does not mean that RMITs are stuck in a static, lifelong
mold, Jones points out. Rather, they are masters of continual personal and
professional re-invention. They are not merely serial entrepreneurs but
serial change artists.

When you love what you do, you can spend your entire life doing it.

Ben’s Good Cents

“He that hath a trade, hath an estate; and he that hath a calling,
hath an office of profit and honour,” as Poor Richard says.

The Franklin Prosperity Report • 9

 Investing
‘TIPS’ for Tightwads
Imagine a safe, secure investment that’s guaranteed to increase in value
at least as much as inflation, pays interest that also increases with any
rise in value, and that you can buy with no fees.

You can get all that, and you can buy it easily online, have your securities
electronically stored at one of the safest facilities on the planet, and
manage your holdings 24/7 from your PC. Oh, and your earnings are free of
all state and local taxes.

If that all sounds good, then consider investing in “Treasury Inflation-

Protected Securities” – known as TIPS – a great way to protect at least a
portion of your nest egg if inflation flares up.

The reason is “real yield.” That’s the effective yield you get on your
fixed-income investments after taking account of inflation. TIPS protect your
real yield while other fixed-income investments don’t.

TIPS have changed the investing landscape, says Cliff Reynolds Jr., an
analyst with Acropolis Investment Management in St. Louis, which manages
$1.1 billion for investors nationwide.

Not only are TIPS fully backed by the U.S. government but also principal
and interest payments are adjusted for inflation based on changes in the
consumer price index (CPI). That’s right, the government will actually chip
in to increase the amount of your original investment (your principal) when
inflation rises.

In return for this government largess, you’ll probably have to accept a

somewhat lower yield. But it will be more than worthwhile if inflation rears
its ugly head.

Here’s how it works: Interest payments on TIPS are made twice yearly, based
on the inflation-adjusted principal amount. Your principal changes at the
same rate as the CPI. And since interest payments are a fixed percentage of
your principal, those payments rise as well. So if you think that inflation
is set to soar, TIPS are a terrific deal.

What if the opposite happens and there’s deflation? Not to worry. The
Treasury still will pay the owner the original face value of the security
when it matures, even if the CPI has dropped.

Lowest-Cost Way to Buy

You can buy TIPS through brokers or in mutual funds and exchange-traded
funds (ETFs). But those methods involve brokerage and management fees that

10 • The Franklin Prosperity Report

eat into your savings. What many investors don’t realize, however, is that
there’s a safe and easy way to avoid all of those fees when investing in
TIPS: Open your own account at the U.S. Treasury and buy TIPS (or any other
types of Treasury bills and bonds) right from the source — no fees attached.

And there’s more good news: The direct-buying window no is longer limited to
individuals. Treasury recently opened the process to other U.S. “entities”
such as corporations, partnerships, trusts, LLCs, professional LLCS and
sole proprietorships.

You don’t have to be Bill Gates to buy TIPS either. They are available in
$1,000 increments in terms of five, 10 and 20 years. You can sell TIPS at
market value prior to maturity through the Treasury for a $45 fee.

To buy directly, open a secure account at www.treasurydirect.gov. It takes

only 10 minutes.

The Truth About ETFs (Hint: They Really Are Good!)

Exchange-traded funds (ETFs) are Wall Street’s new darlings. These pre-
packaged baskets of stocks or bonds resemble traditional mutual funds but
trade on investment exchanges like regular stocks.

They carry risks, as do all stock holdings. But the truth is this: When
used properly, ETFs are a terrific, low-cost way for individual investors to
invest conservatively (and cheaply!) in industry sectors and to diversify
a portfolio. In many ways, they beat the big-name no-load mutual funds
that have been the most popular way for small investors to buy stocks
for decades. That’s one reason they’ve proliferated: About 760 ETFs are
available.

“ETFs can be a useful tool to diversify a portfolio position in volatile,

higher-risk or hard to research areas like small-cap stocks, emerging
markets, and gold,” says James Stack, president of InvesTech Research.
Stack, one of the investment world’s most prescient stock pickers over
several decades, also pegs ETFs as a good way to diversify a small portfolio
of less than $100,000.

Most (but not all) ETFs are index funds built to mimic the performance of
a particular stock or bond index or industry sector by owning each of the
securities tracked in that index. These index ETFs are managed passively,
which means they simply own the shares in the index and don’t buy and sell,
as do actively managed funds.

Here are some of the things that make ETFs attractive compared with
researching and buying individual stocks or traditional mutual funds:

• Reduced volatility: Investors who pick individual stocks in any given

industry sector can see those stocks move in extreme directions, one
way or another. But ETFs offer a way to invest in industry sectors and

The Franklin Prosperity Report • 11

 diversify across an entire industry group and thus lower volatility.
“When you buy individual stocks, you can make the right decision on the
sector, and still end up with the wrong result,” notes Jim Ross, senior
managing director at State Street Global Advisors.

• Easy to buy and sell: ETF shares trade alongside regular shares on stock
exchanges and you can buy them through any regular broker.

• Low costs: Because they are mostly passively managed index-style funds,
ETFs tend to have low annual expense ratios, in the neighborhood of 0.15
to 0.50 percent. These costs are considerably lower than the typical
actively managed mutual fund, where expense ratios range from 0.70 to
1.5 percent or more and are also lower than most traditional index
funds. ETFs have a cost advantage because they don’t have the expense
of helping investors buy and sell shares.

• Pricing flexibility: With traditional mutual funds, you can buy or sell
shares only at the fixed price set at the end of each trading day once
the markets have closed. But ETFs trade continuously throughout the day,
so you can set specific prices at which you want to buy or sell and use
trading tools such as limit and stop orders to protect yourself. ETFs
also can be sold short or purchased on margin.

• Pricing efficiency: Closed-end funds can sometimes trade at a discount or

premium to the value of the underlying securities (net asset value, or
NAV) in the fund’s portfolio. Because ETFs are structured differently
they rarely carry such pricing discrepancies.

• Range of choices: There’s now an ETF for almost any industry sector you
could want. A variety of general index funds covers large-, mid- and
small-cap stocks, and sector funds cover biotechnology, energy, finance,
natural resources, real estate, technology, and telecommunications. And
that’s just a start.

• Targeted diversification: ETFs offer an easy way to diversify holdings

within any given sector. Buying individual stocks exposes you to stock-
picking risks, while an ETF offers exposure to an entire stock index,
including all companies in it. While that lowers your risk, it also
means you give up the chance to hit a big winner.

A few major firms offering ETFs include iShares (www.ishares.com), Market

Vectors (www.vaneck.com), PowerShares (www.invescopowershares.com) and
Vanguard (www.vanguard.com).

Ben’s Good Cents

“Fools make feasts, and wise men eat them.”

12 • The Franklin Prosperity Report

 Small Business
Why You Need Online Reputation Management
Most small business owners know how powerful word-of-mouth can be. Online,
“digital word-of-mouth” can magnify the process a hundredfold. But the
rapid growth of digital word-of-mouth through online reviews and social
media presents a huge challenge for small and mid-sized business owners
who are often oblivious to what’s being said about them on the Internet.

As a result, companies are lining up to begin offering reputation management

services. You’ll soon be deluged with offers for ERPM – short for “e-mail,
reputation, and presence management” services. “There are simply too many
disparate conversations going on through social networks, user reviews,
message boards and online affinity groups for a small business to find, let
alone track manually,” says Matt Booth, senior vice president at research
firm BIA/Kelsey. Booth says there’s a huge need, and the segment is poised
to explode with solutions that help biz owners better manage their online
reputations.

You have two basic choices to track and manage your Internet reputation: Do
it yourself, or hire help. Either way, the key is to take proactive steps
to monitor what’s being said about your company online, and build the best
reputation you can for your business and brand.

Reputation management services generally include these features:

• Monitor the Web for any mentions of your business or brand, including
online forums, blogs, social sites (such as Facebook, Twitter, and
LinkedIn) as well as traditional news sites.

• Help you build a positive presence online by issuing press releases,

creating a media presence, and posting other content that will show up
first in search results. A growing presence on search engines can push
negative information down in search results.

• Deal with damaging comments by posting responses in powerful places or

contacting Web site owners. One tactic is to create micro Web sites for
your business using your name on other domain extensions, such as .net,
.biz, .us or others.

Here are some helpful services:

Trackur (www.trackur.com)is an online reputation and social media monitoring

tool designed to help you track what is said about you on online. Trackur
scans hundreds of millions of Web pages — including news, blogs, video,
images, and forums — and lets you know if it discovers anything that matches
the keywords that interest you. Using sophisticated social media monitoring
and filtering technology, Trackur can serve as an online reputation guardian

The Franklin Prosperity Report • 13

 by scanning the Web for any mention of your name, brands, and products.

The service MyReputation, from reputationdefender.com, is an online

reputation management solution that lets you review everything that’s
available about you online. If there is unwanted content about you on the
Internet, its experts will work to remove that information.

Marchex, a search and performance advertising firm, is launching a new online

reputation management service for small business. To sign up for the beta
of Marchex Reputation Management, visit www.marchex.com/repmanagement.

Ratepoint.com is a Web-based solution that helps you collect, manage and

promote authentic customer feedback, improve customer service, strengthen
customer relationships and build trust.

How Small Companies Can Boost Foreign Sales

Most small U.S. firms don’t bother trying to sell or ship globally because
of hassles with currency conversion, languages, customs, shipping, customer
service, and fraud. But that’s changing as new services sprout that remove
the hurdles.

Firms such as Shipwire and International Checkout offer services that

facilitate selling to buyers regardless of where they are. Some even assume
all fraud risk and charge no fees to the merchant. International Checkout,
for example, guarantees payment to you in U.S. dollars (customers settle in
local currency); provides shipping and fulfillment worldwide (you send the
goods to them and they ship overseas); and offers multi-lingual customer
service along with customs clearance. You relax and collect the cash.

By integrating your own Web site with International Checkout, you can
quickly offer an “International Checkout” button for overseas buyers and
begin boosting revenues.

Customers worldwide can browse and add items to a shopping cart directly on
your site. With the click of a button, contents of the cart are transferred
to a separate international checkout.

More at www.internationalcheckoutsolutions.com or www.shipwire.com.

Ben’s Good Cents

“Experience keeps a dear school, but fools will learn in no other,”
as Poor Richard says.

14 • The Franklin Prosperity Report

 Spending
Where to Find Freebies That Are Really Free
“Free” always has been a good thing. In our new age of thrift, it’s even
better. But free is a radically misused word, and often is just a set-up to
sell you something. Yet the Internet has taken the art of finding the real
freebies to new heights, with sites devoted to helping you live the high
life without spending a dime.

The best online freebie directories are loaded with great totally free
stuff, updated daily, such as travel freebies, free T-shirts, makeup
samples, free groceries, health drinks, and toys. These sites are leaders:
www.freemania.net; www.allfreethings.com; www.freebiedirectory.com; and
www.idontpay.com.

You can even get your shipping for free. The Web site www.freeshipping.com
is a terrific place to save money by locating online merchants that offer
free shipping on anything you buy. Simply find a merchant in its directory
of more than 1,000 online stores and shop as you normally would. If you
ever pay a shipping charge, you can get cash back, up to $500 per year. The
site lists members-only rebates you can’t get anywhere else. All of your
purchases are covered by a price-protection program and automatic double
warranty — a great deal all around.

For home-based and small businesses, www.freesourcing.org (itself a free

service) provides a searchable online directory of only the truly free Web-
based business resources. You can search the directory using common terms,
or click on one of 14 categories such as analytics, customer relationship
management, marketing, or software to reveal a list of offerings with a
brief description and user ratings.

Arm Yourself With Pricing Info on Nearly Anything

Thinking of a new purchase? When it comes to spending your hard-earned
money, information is power. The more you know about prices, the better,
especially when making big-ticket purchases or shopping for a product or
service you’re not familiar with. For example, how much should it cost to
replace a car transmission? What should you pay a nanny? What are typical
costs for replacement windows?

Cost Helper, at www.costhelper.com is a super handy site offering

comprehensive cost information on thousands of products and services in
categories such as kids and babies, cars, health and personal care, home
and garden, personal finance, pets, and weddings.

There are more than 600 total and every topic includes an article researched
and written by an unbiased expert.

The Franklin Prosperity Report • 15

 Your Home
Why You Should Skip That Biweekly Mortgage Offer
Along with their monthly mortgage statements, many homeowners have been
receiving lender offers to convert to a biweekly payment plan. The lure is
tens of thousands of dollars in potential interest savings over the life
of the loan. Should you bite?

Probably not. When you sign on to make biweekly rather than monthly
payments, you are agreeing to make the equivalent of 13 monthly payments
per year instead of 12. That’s where the savings are. As your principal
balance drops more quickly, you pay less interest and the loan is retired
sooner.

But such biweekly loan plans often come with stiff fees. CitiMortgage, for
example, runs its BiWeekly Advantage Plan through an affiliate called FNC
Insurance Agency and charges a hefty $375 “enrollment fee” plus a $1.50
“transaction fee” on each payment.

What many homeowners don’t realize is that they probably can do the
same thing on their existing mortgage simply by sending a larger payment
each month. Any amount above the set monthly payment will go to pay down
principal and thus save on interest.

By using this strategy you get the same benefits as with the biweekly plan,
but avoid the fees and don’t have to lock yourself into making the larger
payments. That gives you complete flexibility to make the extra payments
when you can.

Get $1,500 Back on Home-Improvement Purchases

Many homeowners believe that home-improvement tax credits don’t apply to
them or require you to invest in exotic technologies. Not so. Tax credits
apply to mundane upgrades such as windows, doors, water heaters, and even
central air.

What’s more, you can pocket $1,500 in credits (that’s a dollar-for-dollar

reduction of tax owed) for a wide range of energy-efficient home purchases
regardless of your income or the value or age of your dwelling.

Here’s what’s available:

Credits at 30 percent of cost (up to $1,500) are available in 2009 and
2010 on doors, windows, central air, furnaces, water heaters, insulation,
roofing, water heaters, and biomass stoves. You can take the $1,500 credit
on a single purchase, or combine purchases to reach the $1,500 limit.

Tax credits at 30 percent of cost with no dollar limit, good through 2016,

16 • The Franklin Prosperity Report

include: geothermal heat pumps, solar panels, solar water heaters, fuel
cells, and small wind-energy systems.

Window replacements are particularly popular. “Homeowners receive triple

savings when replacing drafty, older windows,” says Tom Kraeutler, co-host
of The Money Pit radio show.

“First, from the day they’re installed, energy-efficient windows help save
on both heating and cooling bills.

“Second, upgraded windows add resale value to your home. And third, when you
select windows with .30 or less u-factor and solar heat Gain Coefficient,
you’re eligible for a $1,500 tax credit in 2009 or 2010. That’s a trifecta
of savings!”

The rules:

• Items must be placed in service by Dec. 31, 2010.

• T
hey must be for your principal residence, except for geothermal
heat pumps, solar water heaters, solar panels, and small wind energy
systems, where second homes qualify.

• T
he maximum total amount that can be claimed for all products placed
in service in 2009 and 2010 for most home improvements is $1,500,
except for geothermal heat pumps, solar water heaters, solar panels,
fuel cells, and small wind energy systems, which are not subject to
this cap, and are in effect through 2016.

• Items must have a manufacturer certification statement to qualify.

• I
mprovements made in 2009 will be claimed on your 2009 taxes (filed by
April 15, 2010). Use IRS Tax Form 5695 (2009 version).

• I
f you are building a new home, you can qualify for the tax credit for
geothermal heat pumps, photovoltaics, solar water heaters, small wind
energy systems, and fuel cells, but not the tax credits for windows,
doors, insulation, roofs, HVAC, or non-solar water heaters.

For details, visit www.energystar.gov/taxcredits.

Ben’s Good Cents

“Not to oversee workmen is to leave them your purse open.
Trusting too much to other’s care is the ruin of many.”

The Franklin Prosperity Report • 17

 Franklin Matters
Franklin’s Advice on Running
A Successful Business
By Dr. Mark Skousen

“Drive thy business! Let not it drive you.” —­ Poor Richard’s Almanac

In 2004, the hit film National Treasure, starring Nicolas Cage, thrilled
audiences with the possibility that our country’s founders buried a
remarkable amount of wealth available to anyone willing to decipher the
clues telling of its whereabouts. The movie portrayed Benjamin Franklin
as central to the scheme via clever inventions and hints in his “Silence
Dogood” letters. Rather than conspire to hide wealth from others, the real
Benjamin Franklin left a road map to wealth that thousands have followed.

In his Advice to a Young Tradesman Franklin wrote, “In short, the way to
wealth, if you desire it, is as plain as the way to market. It depends
chiefly on two words, industry and frugality; that is, waste neither time
nor money, but make the best use of both. Without industry and frugality
nothing will do, and with them everything.”

Through his life and writings, Franklin did more than anyone else to lay
the groundwork for wealth creation in our emerging nation. Before he became
a patriot, founding father, and an internationally renowned scientist,
Benjamin Franklin was a businessman. In fact, the vast majority of his
political activities were funded by his business earnings. He chronicled
much of his business story in his Autobiography, thus creating the first
“rags to riches” story in American history. Business luminaries from
Andrew Carnegie and Thomas Mellon to Berkshire Hathaway’s Warren Buffett
and Charlie Munger have sworn by Franklin’s good counsel.

Franklin used his autobiography and the published maxims to promote such
virtues as honesty, hard work, thrift, doing good to others, and the
power of a good reputation. He more often than not utilizes the power of
reward in getting others to cooperate rather than relying on the power of
punishment.

As such, Franklin is an ideal role model for modern American entrepreneurs,

who constantly manage the tension to compete and cooperate in any given
business situation.

Here are 11 rules Franklin lived by in the pursuit of profits:

• Hard work and patience pay off in the end for those willing to put

18 • The Franklin Prosperity Report

 in the hours. “Energy and persistence conquers all things.”

• Be cost-conscious, be frugal, and manage your time. “Doth thou love

life? Then do not squander time, for that’s the stuff life is made of.”

• Live moderately. “Great spenders are bad lenders.”

“
• A job worth doing is a job worth doing well. “Haste
makes waste.” Before he
• Take the long road to success. “Patience in market is
was known
worth pounds in a year.” as a patriot,
• Always put business relationships on paper, especially
Franklin
among friends, to avoid future potential disagreements. was a

”
“When a friend deals with a friend, let the bargain
be clear and well penn’d, that they may continue to be
businessman.
friends to the end.”

• Master your business, and keep up to date. “The used key is always
bright.”

• Develop good contacts with everyone in your business, including

government officials. Good relationships will help you obtain bargains
with suppliers. Franklin established an organization called the “Junto”
to get to know fellow tradesmen, which helped him immensely in expanding
his business.

• Establish a “character of integrity” in business. Never underestimate

the power of a good reputation. Never speak ill of others if you can
help it. “Love your enemies, for they tell you your faults.”

• Seek reliable and experienced business partners. Be alert to devious

men and swindlers. “Don’t judge men’s wealth or piety by their Sunday
appearance.”

• Above all, be humble. “Success has ruined many a man.”

Be free,

Mark Skousen, Ph.D., is a sixth-generation grandson of Benjamin Franklin.

Dr. Skousen is an economist and holds the Benjamin Franklin Chair of
Management at Grantham University. He is the author of The Compleated
Autobiography by Benjamin Franklin.

The Franklin Prosperity Report • 19

 Nota Bene
Increase Your Social Security Payout by Thousands
Weekend golfers often take a mulligan — a “do-over” — if they muff a shot.
But did you know you can do the same with Social Security payments?

Many people opt to take payment starting as early as age 62. That decision
might have looked right then. But an early start means less money monthly
— about 25 percent less, forever. As economic woes send early retirees back
to work, many are seeking ways to shore up income in the future, and that
means re-thinking Social Security strategy.

Here’s your mulligan: A little-known Social Security Administration rule

that lets you change your mind, even if you are already receiving benefits.
By filing a request for withdrawal of application, you can undo your Social
Security claim and re-apply at a future date, thus receiving a bigger
monthly stipend.

The amount probably will be 7 percent to 8 percent larger for each additional
year you wait. So if you start benefits at 70 rather than 62, you nearly
double your monthly payout.

The biggest advantage of resetting Social Security falls to married couples,

says Brett Horowitz, vice president at Evensky & Katz, a wealth management
firm in Coral Gables, Fla. If both are drawing benefits and one dies, the
other is entitled to continue receiving the higher amount, meaning even
more money over time.

Before you take the Social Security mulligan, here are some things you need
to know:

• You’ll have to repay all benefits you’ve received, not over time, but
all at once. That sounds dicey, but since you are not required to pay
any interest on what you received, think of it as an interest-free loan
from Uncle Sam you’ve had the benefit of using. That’s a heck of a deal.

• Payback must include any benefits your spouse or children received as a

result of your application. Don’t worry about calculating the amount you
have to return. The SSA will let you know.

• If you are entitled to Medicare now, you also can withdraw your Medicare
coverage, although this is not required. If you are not yet entitled to
Medicare, you will not be enrolled automatically when you turn 65, so
be sure to contact the Social Security Administration before applying.

To change your Social Security start date, use Form SSA-521, available at
www.ssa.gov. The form will ask why you changed your mind, but Horowitz says
not to worry: “You can put down any reason and they will accept it.”

20 • The Franklin Prosperity Report