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 - Get Report), 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).

At of the end of 2006, when EXC closed the year at $61.89, my stake in EXC was worth about $82,000. (Note that EXC is now a few points higher, at the date of this article.) This was after I sold a small portion of my EXC holdings (just 100 shares), for the first and only time ever, to diversify into some property in North Carolina.

All told, for the 25-year period of December 1981 through December 2006, I estimate that my internal rate of return (or IRR) on my investment in PE/PECO/EXC is 12.70%. Now, I have to admit, over the same period of time, that investment has underperformed the S&P 500 ( SPX) by about 200 basis points, and I have plenty of other investments that have done significantly better. However, that is not the point of this story. The 1981 investment was made by a college student in a much less sophisticated investment environment and not by the same person who years later became an investment professional.

Lessons Learned

Small investments can finance big investments: I weathered a fair amount of volatility since 1981, and even though I did not meet Jim Cramer until many years later, his "buy and do homework" mantra was really put to the test with PE/PECO/EXCO. I continued to do my homework over the years, and I now have about $82,000 plus some property -- all as a result of my having the mind-set of investing that $1,437.57 in my senior year of college, when I could have just as easily bought a new stereo or gone to Mexico for spring break. That $82,000 will send a child to college for a few years (depending on where they go).

To ensure that you realize your long-term dreams, you need to decide today whether in 25 years (for example) you will be better off with some pictures from Acapulco to remind you of what you looked like 25 pounds ago (and with a full head of hair of original color) or a solid nest egg.

Over the years, I have also put some money into other utility DRIPs with additional success. Just last year I cashed in savings bonds from my bar mitzvah (I admit I might have done it a year or so late). Needless to say, I bought shares of Progress Energy ( PGN) in that company's DRIP, for my charitable trust. With small investments like these, in 25 years there will be something nice for my grandkids.

Waste it now or have it later: I exploded when my daughter ran up over $100 in text messages to her friend. My wife and I cut her off from text messaging and made her pay for the text messages. She learned quickly. My kids wonder how their parents can own two houses or why we bought a boat last summer, yet I get in their face about wasting money. I explain to them in very simple terms as I have done here that you can decide -- waste it now or have it later.

When my kids receive their bar or bat mitzvah gift, we allow them one luxury item like a computer, and the rest gets invested. The bat mitzvah portfolios now have Apple ( AAPL - Get Report), Google ( GOOG - Get Report), McDonald's ( MCD - Get Report) and Sears Holdings ( SHLD). Goldman Sachs ( GS - Get Report) would be the next to be added.

So, if you want to take that road to becoming a millionaire, think about what you can do today to be one step closer to that goal. The decision between buying that new flat-panel TV or investing in a good mutual fund should be an easy one to make. In 25 years you will have either a nice money-making investment or memories of watching Deal or No Deal.

Key Points:

  • Becoming a millionaire requires a plan and long-term discipline.
  • Think twice before making short-term consumer decisions and weigh them against long-term investment opportunities -- you can't deposit memories into the bank.
  • Develop savings and investment habits early in life. Teach them to you children.

Some Homework:

  • Read The Millionaire Next Door by Stanley and Danko.

  • Perform a personal audit of your cash flows, income and expenses and balance sheet at least once a year. Tax time is an optimal point in the calendar to do so.
  • Look to turn expenses into savings.
  • Bring your children and grandchildren into the investing conversation.

To learn more about the topics in this article, click here to view Gregg Greenberg's video interview with Scott Rothbort.

At the time of publication, Rothbort was long AAPL, EXC, GOOG, GS, MCD, PGN, SHLD, although positions can change at any time.

Scott Rothbort has over 20 years of experience in the financial services industry. In 2002, Rothbort founded LakeView Asset Management, LLC, a registered investment advisor based in Millburn, N.J., which offers customized individually managed separate accounts, including proprietary long/short strategies to its high net worth clientele.

Immediately prior to that, Rothbort worked at Merrill Lynch for 10 years, where he was instrumental in building the global equity derivative business and managed the global equity swap business from its inception. Rothbort previously held international assignments in Tokyo, Hong Kong and London while working for Morgan Stanley and County NatWest Securities.

Rothbort holds an MBA in finance and international business from the Stern School of Business of New York University and a BS in economics and accounting from the Wharton School of Business of the University of Pennsylvania. He is a Professor of Finance and the Chief Market Strategist for the Stillman School of Business of Seton Hall University.

For more information about Scott Rothbort and LakeView Asset Management, LLC, visit the company's Web site at www.lakeviewasset.com. Scott appreciates your feedback; click here to send him an email.