Editor's Note: The following is an excerpt available exclusively at TheStreet.com from a story originally published by InvestmentU.
I've been a long-time fan of billionaire mutual fund magnate John Templeton, a man I've met several times, including when I lived in the Bahamas in the 1980s.
In October, I saw Sir John (he was knighted by Queen Elizabeth in 1992) on video at the London Money Show. He is 93 years old, but looked very alert, and although he spends more time on his religious and charitable work, he remains an avid investor.
Here is Templeton's five-step formula for financial independence, based on almost a century of experience.Take calculated risks. Templeton started off by taking significant risks in his business and investments. He was a serious poker player in college, and in 1939, he borrowed $10,000 from his boss to bet on 100 stocks listed on the New York Stock Exchange selling for under a buck. A high percentage of these companies were close to bankruptcy, but Templeton reasoned that they would recover during a wartime economy. (It pays to have a correct "macro" view of the world.) In four years, he sold all the stocks, paid off the debt, and pocketed $40,000 in profit. He was on his way to success. Save, don't spend. Templeton started out poor, but through the principles of thrift and hard work, he was able to get ahead. When he married, he and his wife set a goal of saving 50% of their income. He avoided consumer debt -- in fact, he bought his first home with cash. He carried his "cheap" approach into later life. I met Sir John once in the Bahamas in his Rolls Royce, but he was quick to tell me that he bought it used! He always works hard, putting in 60 hours a week. He would agree with J. Paul Getty, whose motto was, "Make your money first ... then think about spending it."