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In late 1981, not long before my 19th birthday, I left Bryanston—my second and final English boarding school—for the last time. I didn’t graduate. Nobody did. At the time, graduation simply wasn’t a thing at English schools, and apparently it still isn’t.
Instead, I’d taken the Cambridge entrance exam, marking the end of my nine years at boarding school. With the exams over, it was time to pack my bags and head back to Washington, DC, where my parents were living.
I spent most of the next 10 months, while I waited to “go up” to Cambridge, working for a tiny newspaper in Washington’s Maryland suburbs. The newspaper’s staff—most of them women trying to keep a foot in the work world while raising children—were uniformly generous with their wisdom, looking to pass it on to the uncouth youth who’d landed in their midst. I’ve mentioned before how the paper’s editor took me under her wing.
The advertising manager, Joan Schwartz, did the same. She wanted to take a public speaking course run by Toastmasters, and persuaded me to join her. As part of the course, we all had to give a five-minute speech.
One attendee discussed his stock-market investing. He talked about how he’d started buying individual stocks during the 1970s, a miserable decade for the market. By the time he cashed out in the early 1980s, his total profit amounted to $5—the same sum he’d managed to make by picking up bills and coins he spotted while jogging.
It was one of the first times I ever heard anybody talk about their experience investing in stocks. It wasn’t exactly a glowing endorsement. Fortunately, I wasn’t discouraged.
When I was growing up, my parents weren’t stock-market investors. That would come later, in part with my encouragement. Instead, when it came to investing, the dinner table conversation was mostly about the virtues of homeownership. Reflecting the 1970s, I learned about the upside of inflation, and how it could drive home prices higher, even as it made the monthly payments on a fixed-rate mortgage ever more affordable.
But what about you? What investing lessons did you learn growing up—and did those lessons prove useful?
Somehow learned from my parents about finance. They did not discuss money, stocks or a budget but it came through mainly by example. We did not have that much but we spent wisely. One thing was, my Dad had me get the Chicago Tribune, and he always said it must be the Latest Markets. He wanted the stocks closing price and he always read the Finance Section, this was in 1954 or so. Mom showed me her budget system which consisted of 7 envelopes, groceries, gas, electric, and the like. I always remember her saying robbing Peter to pay Paul, meaning taking extra from one envelope and putting it the next.
Also if you wanted money in your pocket, you had to earn it, for me a newspaper route where I had to collect 10¢ from each customer weekly for the paper, believe me you learn a lot about people. Then doing extra chores for Grandma, and get a quarter. One day my parents said you can get a Bank account and the bank will give you interest on your money instead of just keeping it in a drawer, hmmmm. So that is the start of my learning about compounding your money and that was brought home very clearly in college in my Engineering Economics course. Also at 16 and then saving more with a part time job at the grocery store. Then Dad taught me how to do my Income Tax to get a refund! Have done my IRS taxes every year since, from one page to now over 50 pages of forms, luckily we have Turbo Tax.
One more thing, in College, I had to earn my way through and became a CoOp student working a semester on and off. I invested my money for school in stocks, very risky, because I was just learning how to select stocks, my broker who liked restaurants said buy McDonald’s but that was to high priced per share. Fortunately I had ups and downs, learned a lot and Graduated.
One last thing, as a parent I learned it is not so much what you say, because your children learn from your EXAMPLE, so it what you do, remember they watch you for 20 years or more! And they learn a lot.
I first became interested in stocks when I was in high school. In 1966, I told my father that I would like to invest $150 of my savings in GM. He took me to a local stock broker who convinced me to invest in Cessna. Unfortunately, my stock performed about as poorly as the rest of the market from 1966 to the early 1970s when I sold it at a substantial loss. This experience soured me on stocks to the point that I didn’t start allocating a portion of my IRA contributions to equities until ~1990. While I have remained a conservative investor, I forced myself to allocate 50% to equities about 30 years ago and things have worked out better than I ever imagined.
My father’s number one saying was always, “A fool and his money are soon parted”. That adage has been true throughout the ages! Seriously though, he used to give us dividend stocks as birthday presents. I learned very early the value of reinvesting dividends and the principal of compounding interest.
My father taught me much about money, but it was mostly how not to do it. There was no planning and every large bill was a surprise. I remember every year when he got the tax bill for the house it was panic. I used to say “Doesn’t this bill come every year at this time?” Why not plan for it and save? The experience made me appreciate planning and saving for the future. Bogleheads and Humble Dollar helped a lot too.
Tim, your story reminds me of my big brother and his driving habits, he destroyed every car he ever touched. I’ve always said that he taught me what not to do. Funny thing is he became a cop and later a municipal court magistrate.
My uncles got me collecting coins when I was 4 years old, and a year later when JFK was assassinated, I grabbed all the JFK half dollars I could. That led to a large coin collection which I sold in 1979 for the down payment for our home. My wife and I came across Howard Ruff’s “The Ruff Times” investment newsletter about that time, and that led us to an investment club we’ve belonged to for 40 years. We didn’t get a lot of advice from our families, but we’ve passed on what we learned to our close friends and our kids. Our 4 year old grand-daughter collects coins now.
My parents never discussed their finances with their children. My investment journey started sometime in the 90s. With the advent of HMOs the orthopedic doctors’ practice I was working for decided to sell the physical therapy department to the local hospital.
At that point I had a small pension and profit sharing balance that I was trying to decide what to do with. I mentioned to my brother, who at the time was investing online (at the time a lot of people were not even connected to the web) that I was going to talk to a church member who worked for a brokerage firm. His response was you have a computer and a brain (a big concession to make to an older twin brother). He gave me a hyperlink to a mutual fund screening site.
I entered the following criteria: 1) a certain ten year minimum return (at the time not knowing that past performance is not linked to future returns), 2) the head of the fund was there for at least 10 years, 3) a certain maximum fund expense. I noticed one curious data point. A certain mutual fund company by the name of Vanguard made up more than 3/4 of the results.
And the rest as they say is history!
When I was in the Air Force, the Officer’s Club had a session on investing. It was mostly a pitch about a particular mutual fund but during the presentation, they mentioned “pay yourself first and save 10%”. I thought that was a good idea and never stopped saving after that. The mutual fund wasn’t much good and the one a fellow officer suggested was even worse but I learned over time that indexing, broad diversification, and staying in the marker works for me.
Was the pitch by “USPA & IRA”?
As I was growing up in Dallas, my dad made a good living as a lawyer. That in itself was a small miracle as he’d been born on a farm in Maryland and was the first one in his family to get an education past high school. He had eventually made his way to Dallas during the Depression, looking for work as a newly minted lawyer since there was nothing to be had back east.
He told me once that your work income wasn’t how you accumulated wealth (he called it “getting leverage”); rather it was long term investing in the market. Back then it was all individual stocks as mutual funds hadn’t yet appeared (or maybe my dad just ignored the few there were). But he started investing in my name as well, and periodically would print out for me a brief list of “my” stocks.
I can’t say I was very interested at the time, but it did plant the notion in my mind that this was someting I needed to carry on with as an adult. While I did that, I was nevertheless very naive and took some bad hits along the way from being overly concentrated in a single stock, along with other mistakes.
Finally, in middle age, I saw the light after I began reading Jonathan’s weekly WSJ column, along with a few other like minded sources. I opened an account at Vanguard and put my modest investable funds into the Total Stock Market Index Fund. To paraphrase Humphrey Bogart in Casablanca, that was the beginning of a beautiful relationship.
I wish that light had come on sooner, but better late than never!
There are two learning courses I will highly recommend for parents to encourage their older teens and young adult children to take. They can prepare them of the wide range of challenges they will face in the adult world.
One course is the Dale Carnegie Human relations course. There are franchises in most cities.
The other is to join your local chapter of Toastmasters. You might as take them too. Overcoming fear of talking and relating to other people in effective ways will make your and theirs lives so much easier.
Telling a dumb joke for 5 minutes while standing in front of strangers will strengthen your real “elevator pitch” later in life.
While growing up poor, I often went over to the neighbor’s house to watch cable TV. The one movie that inspired me into exploring the stock market is Wall Street. Yes, the fictional character, Gordon Gekko, and the infamous Wall Streeter named Ivan Boesky, piqued my interest into the stock market. No, “greed is not good” and emotional temperament are what I learnt while navigating the turbulent dot com era and 2008 recession.
My parents were born in 1918 and 1920 and lived through desperate times during the depression. My Dad rose well above his beginnings and had a 40+ year career with AT&T, beginning with them back when it was the sole provider of telephone services and contracted for numerous government & defense projects.
As a result of his long-term employment my Dad accumulated a fair amount of AT&T stock through profit sharing. In addition, he took a huge risk and invested in a new-fangled drink company called Pepsi. Both of these investments leveraged their later years. My folks never reinvested dividends, but they never sold the stock, either. Through splits, acquisitions, and eventual divestiture by AT&T, they maintained a decidedly unbalanced asset allocation that worked for them.
While I was in high school my Dad taught me to read the stock listings in the newspaper and what the various numbers meant. He even tried to explain the ex-dividend date. My folks had kids late in life, so they retired around the same time I started working as an engineer. Dad was very interested that my initial investment choices were index funds, but was not interested enough to modify his portfolio.
I’ve written about this before. My parents left their estate in a pretty gnarly mess and I was the executor. Much of the source of the mess was lack of follow-through on estate planning, which is something I hope I’ve taken care of for my wife, my kids, and her kids.
Knowledge matters
Knowledge = ability to act, ability to create actions that lead to accumulation
Don’t remember any talks from my parents, which is not to say there weren’t any (based on my memory:). In 1969, while stationed at Ft Sam Huston in San Antonio, my wife and I took one of those investing courses offered by Merrill Lynch to learn the basics. Can’t remember if it was there or reading somewhere that I grasped the “Invest early and often.” and “It’s not timing the market, it’s time in the market.” concepts.
I’ve never sold in the many downturns experienced since then and it allowed this always salaried pharmacist to accumulate a more than comfortable retirement.
Born in 1916, growing up poor, and living through the depression my dad wanted nothing to do with stocks. Like many people at the time, he didn’t understand that the guys jumping out of the windows were leveraged speculators.
I did however learn a great deal about saving and living within my means. My parents bought the house I grew up in shortly before my birth and stayed there for 50 years. Dad’s income was such that we could have lived in a bigger house. Instead, they meticulously cared for and made improvements to the property. They were never ones to buy lots of little junk, instead opting for fewer purchases of a higher quality. For example, replacing the old sash windows with state of the art (for the time period) insulated picture windows, and a built in pool. Our education was important to my folks; they paid private school tuition for my brother and I, and college tuition as well, then they helped pay for their 4 grandkids Catholic school and college tuition.
My investment habits were self-taught by trial and error. My financial discipline is wholly owed to the examples set by my dad and mom.
I had no education about stocks, my family were blue/pink collar workers. Spouse had grandparents who were wealthy, but when we tried to ask about stocks, they were uninterested in educating us. All the grandmother said was to research, but we had no idea about how to do that. I did become educated later about our 401k, but we still don’t have a lot of education about buying individual stocks. We only have a “play” account to learn, and Spouse has a little stock they were able to buy in an employee stock purchase plan for one of their employers. It has been our best investment, but we were surprised. Chris
My parents had no use for stocks and minimal use for banks. The topic was never discussed, I expect because there was no extra money to invest and my parents were 20 and 12 when the depression hit.
I became interested in investing after I got my first job. There was a brokerage office across the street and on breaks and lunch I would
go there and watch the ticker trying to figure out what was going on.
A cigar, cigarette, pipe smoking broker named Leo showed me the ropes with tips on penny stocks, the only thing in my price range. I recall always expecting that big hit, – the next Xerox at the time – the stock I bought for fifty cents skyrocketing to $5.00, but it never happened.
One stock I bought for a couple of dollars did make me money – on paper – and then back down again. That was just before Connie and I got engaged. I came home on leave to buy the ring and having no money I sold that stock at loss to pay for the diamond. After the purchase the jeweler said don’t pay me now. When you come home on leave next time you can pay when the ring is ready.
Between June and September that stock took off and had I not sold I could have paid for the ring with the profits from selling in September.
My first lessons in timing and trying to make the easy buck.
Years later I finally convinced my mother to buy 75 shares of my employer stock – a large utility. Knowing my parents had no investments I thought some some day the shares could add a little income. Unfortunately, I could never convince her to reinvest the dividends. She spent the few dollars each quarter. My parents lived on Social Security alone in retirement.
When she died I took the 75 shares as part of my share of her minuscule estate. I still have them and still reinvest the dividends. They were merged with my own shares so I don’t know how many shares the 75 now represent. Today, if I stopped reinvesting, the dividends from my accumulated shares would boost my pension income by 10%. My pension will never increase, but the dividends have.
I have learned the power of compounding and reinvesting and time.
I don’t remember much discussion of investing from my parents. We knew that our maternal grandmother had some stock investments that she was living off, but there were no details. I think I learned the most from my older brother. He got interested in investing early on and used to watch Wall Street Week religiously. He was the driving force behind our investment club, and is still one of the most knowledgable and interesting people I know when it comes to investing.
Rick, I’d like to hear more about your investment club. Did you set up your own guidelines or follow an established organization such as betterinvesting.org? Maybe you could write an article about the club experience?
Rick wrote this piece back in 2022:
https://humbledollar.com/2022/04/drip-drip-drip/
Thanks Jonathan. I did read it and it was interesting. Maybe Rick will share if they did use the club principles from NAIC (National Association of Investment Clubs) formed in 1951, and now called BetterInvesting (BI.)
Olin,
It’s been quite a few years but I recall we did purchase the NAIC guide book and their accounting system materials. We started using their forms and methods. Later I computerized the accounting information. We also used their recommendations on tax preparation – passing through the income and gains to members. We had it very automated and the club ran quite smoothly.
It was a great experience. I learned quite a lot, and made some money. It was also a nice social experience with a bunch of folks who held similar interest.
Thanks Rick! Glad to know you used the NAIC guide book.
I’m not in a club, but have had a lifetime subscription to NAIC/BI for 30+ years. I couldn’t ever conceive of purchasing a stock without using their SSG tool. Plus, their monthly magazine and many webinars they produce is a great benefit to me.
That’s a great tribute to your brother. Do you let him know of your admiration for him?
Edmund, great question. I’ll make sure I do.
My father gave me no encouragement toward investing. The one reference he made to stocks concerned a former business partner. Jim was a pleasant man, but had a kind of melancholy air about him. I knew that he had once owned a large property with a big house outside of town that was now owned by another friend. He now operated a service station owned by yet another friend and chain-smoked the cigarettes that eventually killed him. My father, who hardly ever made a gossipy or negative comment, made a point of saying Jim had lost his wealth “playing the market.” That comment influenced my thinking about stocks for a number of years.
I have one experience with Toastmasters. While visiting a cousin, she convinced me to accompany her to a meeting. I was reluctant, but assented when she assured me I would not be called upon to speak. Of course. I was selected for an impromptu talk. The result: the timekeeper gleefully pointed out I was over, the “ah” counter dinged me and the rebuttal denigrated my view of the topic, which was related to public policy. Overall, though, I thought the folks were pleasant, and enjoyed the evening. And I still find satisfaction in knowing that, 30 years later, my view of the topic has proved correct.
Sorry to hear about your negative experience with Toastmasters. i assure you and the readers that most clubs do NOT force visitors to participate, Many of the members joined to overcome their fear of public speaking. Please give Toastmasters another chance – with 12,000+ clubs I’m sure you will find one that is a good fit. I’m a 20+ year member.
Randy, thanks for giving a good word for Toastmasters. I actually did not have a negative experience. It was my own doing that led to an invitation to speak. The group was small, and I had been chatting with them prior to the meeting. I think I recall the leader giving me the option of declining, but pride pulled me forward. My account is a clumsy attempt to poke fun at myself for not acing a talk on the first go. I left with a favorable impression, just never reconnected.
Edmund, I’ve been curious on occasion about Toastmasters, but everything about your experience sounds like an introvert’s nightmare. I’m happy to stick to scripted presentations.
I think the best lesson I have learned over the years of investing/saving for retirement was to not sell off my holdings when market downturns come around periodically. My soon-to-be-wife and I were young and we had some funds set aside in our employer’s 401’s when the October 1987 crash happened. That was pretty scary as our account values plunged. We were married a couple weeks later. I had always heard that you have to grit your teeth and bear out such market routs, which we did. Over the ensuing years at each market low point (.com, 2007, Covid, etc…) we have held our positions and ridden out the troubles. This approach has paid off handsomely. We have been retired now over five years and are in a position that we can keep our equities at a still fairly high percentage of our portfolio. We have enough cushion and are diversified enough I beleive to ride out more market volatility and we plan to let our savings compound for our children as we take out an optional 2 percent or so each year until RMD’s kick in.
My Dad started investing in stock mutual funds just before the start of the 72/73 bear market. At one point his fund had lost 50% of its value and I recalled him talking with mom one night about what they should do. The impulse to sell was large but then my Dad said “what we should is buy more now that prices were down. I don’t know what they actually did but for me it was a lesson to be ready to invest more during market crashes. That part was fine but it also meant that I kept more dry powder than necessary in anticipation of another market crash. Eventually, I learned to ignore the fear of a market crash to stay more invested all the time to reap the reward of the longer and more substantial market climbs.