An Investor's Thoughts
I’ve come to appreciate you, the reader. That, too, is an interesting phenomenon. I don’t know most of you. Every now and then, someone offers a comment. The comments come from men and women of varying age and diverse nationalities, words appear from different continents, when it might be dark and wintry outside my window, but sunny and warm outside yours. I don’t know you, but you’ve charmed me. I want to show appreciation, but how? Hugs and kisses are quite impossible. The “Thank You” cards lack addresses. Oh, sure, I can pen my thanks here (I just did), but I’d like to do more. Since I am so limited by time and space and ignorance, I can offer little. In lieu of warm embraces, then…
I’m going to try to make you rich.
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You’ve already read a great deal about my failures. That’s not really surprising, is it? It’s failure that I ponder the most. Success is something to be quietly savored. And I’ve seen my fair share of success. My greatest joys and successes involve people…the relationships that blossomed into something profound. Then there is financial success that, while not something crucial to my well-being, is still rather nice. I am semi-retired because I can afford to be. Let’s just say I’m financially “comfortable.” I will remain so after my divorce, despite giving up considerably more than half the wealth.
I normally don’t consider personal financial success as a matter for conversation. It veritably reeks of braggadocio. But, I want to make a point here. I grew up poor, knowing absolutely nothing about investing, yet managed to invest successfully over the passing years. While money truly does not buy happiness, it buys freedom…and that’s important, too.
The key word here is investing. I want all of you, starting right now, to begin investing. If you already do so, great! Learn more! Do more!
My story will serve to illustrate my point.
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Growing up, my refugee family had nothing. It was a hardscrabble life just to survive. There was no talk of Wall Street, bonds, stocks, commodities, options, derivatives or futures. There was just a beat up passbook with paltry few entries and gut-wrenching withdrawals.
I struck out on my own with nothing, just a work ethic and a vague notion that it was important to save. So I worked and saved. I saved laughably small sums.
If I were to point to a watershed moment in my career as an investor, it would be the night a neighbor of mine knocked on my door. He was struggling to get by as an insurance salesman. He admitted he had a drinking problem and was on the verge of losing his job. Could I, would I, buy a policy, anything, to help him out? Well, sure, if it would help. I signed up for an IRA. Fifty dollars would be automatically deducted from my checking account each month for deposit into a stock mutual fund. I had NO idea what to expect. I was bringing home about $700 per month, then. I’d feel the “loss” of the $50. I didn’t know a single thing about stocks, or mutual funds, or IRA’s. Oh, well. My neighbor needed help. Grin and bear it.
After the initial shock to the wallet, I promptly forgot about the whole enterprise. Money went from one account into another…I had jack to do with any of it.
Funny thing happened. At the end of the year, I found myself with several hundred dollars in an IRA and I discovered I had earned a tax break! Free money! Cool! I had just received money for nothing. In a rare flash of wisdom, I decided to invest that tiny windfall, too. It didn’t affect my lifestyle in any way. It was "free" money.
The years passed. The invested sums grew ever larger. We humans think linearly, not geometrically. Only a rare few grasp the enormous potential of compounded growth. Trust me on this: compounded growth, over time, yields great (if not enormous) bounty.
I started to pay attention. I began to “follow the market.” I read books about investing in stocks and bonds. I began to understand the importance of investing as a means to improve one’s economic status. I began to think it terms of net worth, no longer beguiled by simply having things (on loan or credit), but outright owning things. I basically lived debt free. The operative word here is free.
It all snowballed. I learned more, earned more and saved more with the passing years. As I learned more about investing, I discovered wiser, more lucrative ways to invest. I said good-bye to that first IRA. In truth, despite the revolution it precipitated in me, it was a lousy investment. I began investing in a variety of stock mutual funds. I developed a working knowledge of economics, fiscal policy, stock sectors, bull and bear markets and the fundamentals of investing.
As I earned more, I saved more. It didn’t hurt one damn bit. There came the day, about 15 years ago, when my salary was such that I was living a very comfortable middle-class lifestyle. From that day on, I saved and invested all salary increases. I had no need to live ever more affluently. I enjoyed my life as it was. I figured why not invest the rest? So I did. By then, I had "graduated" to investing in individual companies. The risks increased, to be sure. I certainly made my share of mistakes, but my overall returns increased dramatically. The “free money” began to pour in…first a modest stream and then a torrent. There were dividends, capital gains and simple interest to reinvest. Money piled on top of money. The magic of compounded growth revealed itself.
My point is: It was all so simple, so painless, so effortless (compared to seemingly everything else in life)!
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Think of me as that drunken neighbor knocking on your door. If you haven’t already done so, consider opening your first IRA, or making those first contributions to a 401(k) plan, or joining some share-builder program or a modest dividend reinvestment plan. There are many wonderful options for a beginning investor. Just do it…and keep doing it.
Hey, I really wish I could thank you all in some way better than this…but…who knows? Maybe, someday, you’ll be relaxing comfortably, feeling financially secure, and you’ll thank this faceless miscreant blogger…the way I forever thank my woebegone neighbor from so many years ago.
I'd like that.