We’ve looked at IFO’s family experience with investing. Now, let’s contrast DDH’s family experience. Wealth building began with his grandfather – a respected doctor in their hometown! Don’t know for sure, but suspect DDH’s grandfather began to invest his excess money in the 1920s. Grandmother came from a conservative farm background.
We do know that when the Crash came, said grandfather did not panic or sell. He had bought only blue chips and correctly surmised that the company stock he held would survive both Roosevelt and Hitler. That experience was continued by DDH’s mother and sister, who maintained the family nest egg.
DDH’s siblings, even the nutty improvident one, have well-established portfolios and they haven’t blown their inheritances. IFO’s siblings never had any investing experience, but all are two-income families, and own some real estate, so they should be fine. This sibling summary is based on outside observation, since like many middle-class people, talk about money (how much, what kind, etc.) is absolutely, positively verboten!
So, how did IFO get to her present situation? Well, when she married DDH, it became okay to talk about money. It was still tough to talk about QUANTITY, but was perfectly okay to talk about the hows, whys and wherefores of the process. DDH never advised on what stocks to buy, but once we had finally accumulated some excess cash, he did explain how to get a broker and his own prudent philosophy, completely in accord with our own.
No gambling for IFO! NOT! Her first forays in the stock market were into industries she was covering that were nearing the end of a big bubble. Oh gosh, did she take a bath!!! But, she learned a lot, she was still earning money to replace losses, and her holdings never went to zero.
Now she is Ms. Conservative Investor, her holdings produce around a 3.3% dividend return and value is appreciating nicely since the big bust in the market stopped. She’s just a hair under where she was in 2008 and has had some pretty big expenses to cover.
Stay tuned. Tomorrow we’ll talk about some of the lessons she learned during the two market busts she has experienced.