If your scope is seven years or less, there is only one answer: Start a business. You can’t start a capital-intensive business with $18,000. You can’t, for example, open a restaurant or create a new line of pharmaceuticals. But you don’t want to be in those businesses anyway. (The risk/reward ratio isn’t working for you.) Much better to start a business selling something you know about—such as gardening or collecting beer steins or taking care of pets. You can start a little business like this for a few thousand dollars if you start small and go slowly—at first.

It’s true. And you will probably never hear this from any other wealth-building “expert.” Unless you have more than $25,000 to invest, you probably shouldn’t be investing in individual stocks—and you definitely shouldn’t be trading options and futures.

The reason is simple: You want to get wealthy in 7 to 15 years— preferably in less than 7. There is no way that $25,000 can turn into something that even sounds like wealth in that amount of time— hough there are a lot of professional investment gurus who will tell you otherwise. In fact, there is a huge, multi-billion-dollar business that is determined to snow you on this issue.

I made a point of explaining what a beginning wealth builder shouldn’t do.

1. First, when figuring your investable net worth, you really shouldn’t count the equity in your present home unless you plan to sell it and buy a less expensive home during retirement. And even if you do that, you can count only the difference between what your house is currently worth, the mortgage, and what it will cost you to buy another house that you’ll be happy with. Using the example of our dissatisfied conference attendee, he admitted that there was little or no hope of finding a nice retirement home in a community he liked for less than the equity he had in his present house.

2. Next, you shouldn’t be investing in stocks and options if your investable net worth is less than $25,000. In our example, the gentleman was playing the stock market with his entire savings: $18,000. Think about the risk this guy was taking!

So now you know how I feel about stocks, small business, and real estate. Bonds? I love bonds. Especially if you invest in them the way I do: Buy them. Be happy with the guaranteed return. And forget about them.

With this perspective made clear, you will see some sense in the following four model portfolios, each based on a stage of wealth building.

• Stage One: Your investable net worth is less than $25,000.
• Stage Two: Your investable net worth is between $25,000 and $100,000.
• Stage Three: Your investable net worth is more than $100,000 but less than you need to be financially independent.
• Stage Four: You are financially independent.

I believe we are at the tail end of a nationwide real estate bubble. By any fundamental perspective, property prices have gotten out of hand. In some locations, this may mean a significant depreciation. In other, better locations (the Sun Belt, certain cities), it may mean a two- to four-year deflation of 10 percent or 15 percent. The worst depreciation will probably occur with condominiums, which are traditionally overpriced, overfinanced, and too heavily owned by speculators during bubble periods. That said, I’m confident that you will be able to find good real estate deals this year, next year, and each year thereafter during the downturn.

I’m no Donald Trump. I don’t even consider myself a professional real estate investor. I’m a professional marketer who has made real estate investing a nice sideline business. But in the 11 years that I’ve been doing it, my real estate portfolio has grown and grown. As an income producer, real estate has never failed to provide me with less than a very substantial income. As an asset builder, my rental real estate properties have all paid for themselves and provided me with a rate of return that is at least 10 times what I’ve been able to get from stocks and bonds.

I’m bullish on entrepreneurship. And I’m at least as bullish on real estate. Stocks are much riskier than real estate—to me—because (1) I’ve lost money investing in stocks and/or stock funds time and again and (2) I’ve seen so many others lose money. Again, I do believe that the stock market has been and will continue to be a pretty good long-term investment. But long term as far as the market goes is a 10- to 20-year time frame. Since we are concerned with getting wealthy in 7 to 15 years (and since the market is currently overvalued, from a fundamentalist’s point of view), I don’t feel confident in stocks.

Nevertheless, since I began actively investing in real estate—about 11 years ago—I have never lost money on a single transaction. The worst two deals I’ve been in since my first big lesson (i.e., disaster) produced yields of 7 percent and 12 percent annually. And that’s not including tax benefits—which were significant. Most of the real estate investments I’ve made have been good to great.

You can reduce the risk in starting your own small business by sticking closely to what you already know. By “what you know,” I mean (1) the product or service you are selling and (2) the primary method by which you are going to sell it.

Serially successful entrepreneurs follow this formula. They spend thousands of hours figuring out how a particular business works—and once they understand it, they seldom jump into something entirely different.

My own rule for starting a new business is this: One baby step at a time. By that, I mean that I’m willing to try something new—but just a little new. If, for example, I’ve learned how to sell cat food with banner ads on the Internet, I might consider setting up a business that sells cat food with small ads in magazines. (That’s one baby step. If I can’t figure out magazine advertising, I can get out quickly and safely.) But I wouldn’t let myself get into a business that sold cat health-care products through direct mail—even if I could convince myself that I’m an expert in selling cat products. Selling cat health-care products through direct mail is simply too many steps away from my core competence.

If you develop expertise in a particular business and don’t stray too far from it, you’ll always feel confident that you can create a new business without taking a lot of risk.

Muni funds can also play with the value of your shares to your disadvantage. Muni issues are rarely traded. Muni managers can use any reasonable value for fund assets. Though credit quality may have deteriorated, managers often refrain from writing down asset values for fear of losing shareholders. However, at some point asset values must be marked to market to avoid outright fraud and jail time for the fund managers. If you buy fund shares at a high valuation of assets and later have to redeem when assets are written down to realistic levels, you will justifiably feel betrayed.

Fund managers can also turn tax-free munis into taxable bonds. Capital gains from selling appreciated muni bonds are taxable. Individual savers typically hold munis until maturity so there are no capital gains. Muni fund managers trade bonds. This creates capital gains, often short-term capital gains, which are taxed at the highest rate. Muni funds are outside the comfort zone of most savers.

Munis have tremendous tax advantages. Interest paid is not subject to federal, state, or local taxes. However, many savers will find the tax advantage caused them to invest outside their comfort zone. Calls, volatility, and insecure principal may be more than you can handle.

Trust issues are worse for muni funds than for other bond funds. Muni funds offer the advantage of diversification and professional management.

Unfortunately, the fees eat up as much as 25 percent of your interest. This is seldom worthwhile. Muni fund managers rarely outperform a list of unmanaged bonds. Many also try to rev up returns with lower credit issues, including junk munis, and borrow against the fund to increase investments in an attempt to time the market. These tactics are not likely to improve your sleep.