Early this decade in North America, there were all kinds of opportunities for distressed assets investing, and not just in securities. Remember big fiber optics bust? Cisco Systems and Nortel, among others, found themselves with too much inventory and too much debt. After dramatic growth throughout most of 1990s, market for fiber optic equipment and systems declined dramatically in 2001. Fiber overcapacity and cutbacks in telecom carrier capital investment triggered near panics in stock markets in U.S. and Canada.

Fiber optics equipment is constantly being improved to give more bang for buyer’s buck. It’s not something that can lie around in warehouses until market for it improves. Suddenly, a lot of equipment, billions of dollars worth, had to be dumped. Distressed asset investors profited. True, companies and their investors lost a bundle, but they stood to lose everything without intervention of distressed asset investors.

Exodus Communications (an unfortunate name, as it turned out), once claimed to be “the recognized market leader in managed hosting services.” Venture Asset Group, a Palo Alto, Calif.-based financial services firm specializing in sales of assets of troubled telecom companies, got nod to liquidate company’s venture capital investment portfolio in 17 private companies, valued at about $200 million.

A company spokesman said buyers could include storage and Web-hosting companies or speculators, including venture capital firms, looking to pick up cheap investments and turn companies around. “In bankruptcy, everybody’s focus is usually on big assets (such as core company), which are very hard to find buyers for right now. There can be liquidity in small assets.”

Bankruptcies or Chapter 11 reorganizations often trigger distressed assets opportunities. As you might imagine, though, these are rarely opportunities for individual investors. But where there is a possibility of a buck to be made, someone somewhere in investment industry will find a way to let private investors in on fun and rewards. Today, there are funds managed by professionals who have knowledge, flexibility and patience that a company’s creditors may not have.

Before you begin any financial strategy, you must realize that there is a vast difference between what you earn, what you own, and what you’re worth. The amount of money that you earn from going to work everyday is known as your income, and has relatively little to do with your financial status. The sum of value of all of your possessions is known as your wealth, and is a closer guideline. Net worth is real gauge of how close you are to becoming a millionaire, as it is value of all of your assets, subtracted by your total debt. Now that you see that having a large income is not end all guarantee of financial security, let’s move quickly to what you can due to get that million dollars that Mr. Martin so accurately described as first step to being a millionaire.

The first phase in your journey involves understanding that time is of essence. For those who start investing at an early age, power of compound interest turns time into their greatest ally in wealth-building. Once you have been investing for long enough, your investments will begin to consistently, and eventually rather impressively, outperform your paycheck. This is true no matter what level of income you have already achieved. If you have an annual salary of $50,000, and invest only 10 percent of that each year, earning a 10% annual rate of return on your investment, in 25 years you will have amassed over half a million dollars. At this point you will be earning over $50,000 each year in interest. Continue saving at that rate for another 10 years and you will find yourself earning $150,000 annually in interest. 10 percent of your income may seem like a lot, but if you can find an investment which directly debits money from your paycheck each week, you will be surprised to find yourself able to live without it. Another way to ease pain of that 10% decrease in take home pay is to use part or all of it as an excuse to lower your tax burden, which I will discuss later. Now that you’re salting away 10 percent of your income each week, and can’t possibly imagine affording anymore, let’s talk about how you can make one of your largest living expenses work for you rather than against you. I am of course talking about money that you spend providing shelter for yourself and your family.