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Millionaire in the making
Ken Tong knows the rules. That, however, hasn't stopped him from challenging a few.
February 7, 2005: 6:10 PM EST
By Deshundra Jefferson, CNN/Money staff writer

NEW YORK (CNN/Money) - Ken Tong likes to challenge conventional wisdom.

Carrying a high balance on a credit card, for instance, isn't normally a smart savings strategy. But with zero percent interest for one year, the 32-year-old scientist doesn't worry about taking out a $60,000 cash advance.

After all, he's not using it to buy frivolous items.

"It was so tempting to use that money and buy other things," he said. "It was very tempting to put it in a stock account or mutual fund, but that is so volatile."

Ken instead chose to invest the money in an interest-bearing savings account. It's a bold move, but a relatively safe one that will net a tidy $1,400 profit.

A mix of calculated risks, coupled with some traditional strategies, have buttressed the Thousand Oaks, Calif.-area resident's bottom line, now at $444,097. Ken wants to be financially independent within the next 10 years or so, and he has a few tricks that may help him get there.

Risky business?

Ken majored in science with a minor in economics at the University of California, San Diego. Clearly, he has the confidence to make non-traditional investing decisions.

One of his gutsier choices is not to maximize his 401(k) contributions. Ken limits his contribution to the company's match.

"Each person's financial situation is unique," he notes, adding that the only rule should be to max out on the company match. "That it is free money," he says.

He's not neglecting retirement, however. He recently started maxing his Roth IRA, because he prefers to invest after-tax dollars rather than pay those taxes later. In all, his retirement savings stands at $67,258.

Ken has other stock and mutual fund investments outside of his retirement accounts. His company offers an employee stock purchase program and he has a large stake in Janus' mid-cap value fund (Research) and global technology fund (Research).

His next big investment may be real estate. His parents emigrated from Hong Kong with a limited high school education, he says, but his mother, Sanny, ultimately steered the family away from their restaurant business to real estate.

Sanny is now retired, but he is hoping to tap her expertise in the San Diego market to buy an investment property there. Rising home values have boosted his home equity to $317,440.

Ken has a 15-year mortgage, with a 4.75 percent interest rate, on his own home, purchased in 2000. It's three-bedroom, and he's renting out the other two rooms, providing him with an extra $1,200 a month.

His company paid the closing costs as part of his relocation package, but his mom helped him with the 20 percent down payment.

"My mother had my sister and I pay for our own college," he stated. "But when it came to a house purchase, she helped out." (University of California, San Diego does not charge tuition for undergraduates who are in-state residents. Students are responsible for fees, normally a few thousand each year.)

There's no shame in asking your family for help when you are starting out, he says, because if you are responsible you can use that assistance to build your own wealth. He's aware that not all parents can afford to assist their children, so he is especially grateful for the help he received.

Free to spend

Ken isn't an avid coupon clipper nor does he brown bag his lunch. That doesn't mean he isn't a saver; he socks a large part of the more than $60,000 he earns a year into stocks and mutual funds.

He bought his first car, a 2002 Subaru Forester, three years ago. The final sales price was only $800 above the invoice, but taxes and title drove it up to about $24,500. He took out a loan to cover the cost, but paid it off within a year-and-a-half.

"Any interest debt, I eliminated," he explains. "The only interest debt I have is my mortgage, and I am comfortable with that because the interest is tax-deductible."

He's also found a novel way to vacation cheaply. He has received a handful of free trips, including a cruise to Baja California, by attending time share presentations. No purchase necessary, although the sales pitches can be rather aggressive.

Ken claims to be a frugal guy, but that doesn't mean that he is cheap. According to his definition, cheap people are "tight with their money with other people and themselves."

"Because I save in all these other ways, it affords me a lifestyle I am really comfortable with," he notes.  Top of page

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