Life Lessons for Aspiring Millionaires

Editor's Note: In his first article for TheStreet University, Scott Rothbort covered the timely subject of volatility. Now, he discusses a practical way for young investors (as well as families with teens and young adults) to combat volatility and build significant long-term wealth.

As members of a capitalist society, we are driven to amass wealth. The natural bar of success is set at being a millionaire. This has been glorified by the success of TV shows such as Deal or No Deal and Who Wants to Be a Millionaire.

For my undergraduate students at the Stillman School of Business at Seton Hall University, The Millionaire Next Door by Stanley and Danko is required reading. In the future, as I talk more about what you need to do to act like a millionaire, from time to time I will refer to this book.

Attention: Aspiring Millionaires

Becoming a millionaire requires a lot more than just buying a lottery ticket or winning a game show. Millionaire status is achieved best by those who have the right frame of mind, which is best instilled at a younger age. I try to do so with my own five children.

Let me start with one of my own real-life experiences. When I was a junior at the Wharton School of the University of Pennsylvania, my paternal grandfather passed away. Since my father predeceased his father, part of his estate was distributed to me. It was not a huge amount, but for a poor college kid working two or three jobs to pay for school, it was a nice foundation to build on. When I received the money, I was told (although I did not have to be told) that the money should be used on either school tuition or investment, and not to buy things like cars or vacations.

Investing (and Reinvesting) Is the Name of the Game

On Dec. 2, 1981, I went to my other grandfather's broker and bought 100 shares of Philadelphia Electric for $1,437.57 with a part of the money I received from the estate. Over time, Philadelphia Electric became PECO and then was merged with Unicom into what is now Exelon (EXC), which is the stock I currently hold.

It has not been an easy road for those companies. Philly Electric has had its share of problems over the years. Still, since 1981 I have reinvested every single dividend into that initial investment. When my brother graduated college in 1991, I gave him 50 shares. He still owns them and has also reinvested every dividend ever since. Through the dividend reinvestment plan (or DRIP -- "Booyah Breakdown: Good to the Last DRIP"), I added another $1,500 in March 1989, $100 in November 1991 and $400 in November 1999 (when everyone wanted Internet and tech stocks).