Faith, Time and Homework

My motivation for investing is to provide financial independence for my family. My passion for investing comes from watching two important people in my life, my mom and my dad, spend their lives investing in very different things.

My parents married in the early 60’s and had their first child in 1968. They undertook what economists call “household formation” at the tail end of a boom that began in 1945 and began to fall apart in 1973. Throughout their childhood they watched as the post-war boom and the reintroduction of GIs into the workforce transformed our economy from one of agricultural and industrial output into the greatest consumer economy the world has known.

In the postscript of his book “The Psychology of Money,” Morgan Housel lays out the daisy chain of events that led this transformation. The GI Bill extended lending terms to returning soldiers that allowed them to borrow money affordably. Production capacity and innovation borne out of the war effort put millions of veterans in steady jobs with increasing incomes and modest expectations of household luxury.

The answer to the question, “What are all these GIs going to do after the war?” was now obvious. They were going to buy stuff, with money earned from their jobs making new stuff, helped by cheap borrowed money to buy even more stuff.”

My mom and dad found themselves at a transition point between the easy credit and increasing lifestyle expectations of the post-war decades and the period of high inflation and darkening prospects of the mid 70’s. They had every reason to continue the country’s trend of debt-fueled consumption, but for a number of reasons, they chose to live simply. They rarely took on debt, taught their three boys how to build a budget, and wouldn’t give us our allowance until we turned in last month’s ledger detailing how we spent our “income.” In short, they had a good set of heads on their shoulders and bucked the trend of “more is better.”

Dad worked in finance. He was an electronics analyst for an old-line Wall Street firm. But he didn’t trust the market with good reason. During his lifetime, the stock market delivered paltry returns, and he had a front row seat to the 1973-74 recession and the junk bond mania of the early 80’s. His idea of a sound investment was a passbook account for each of his boys that paid simple interest of around 8%. And he invested in his job. His strongest identities were 1) family man and 2) loyal employee. Which is fine until your employer drops you like a bad habit.

Dad was a part of the layoffs that started with the 1984 market crash and concluded with the “big one” of 1987. Once he realized no one was hiring men for finance jobs in their late 50’s, Dad finished out his life working retail at a handful of small-box and big-box stores. He also finished things out single. His bouts with depression brought an end to his 27-year marriage that produced 3 decent boys. Even working customer service at RadioShack and Sears, Dad held his head high and did his jobs admirably. His identity as rock solid employee was intact. This eminently good man died in 2003. A paid-off townhouse, a small bank balance, and an outstanding bill for a new water heater was all he had left.

Mom worked as an accountant in the 1960’s until the fine people of Citibank informed her that “no one will take financial advice from a pregnant woman.” So, she stayed home throughout the 70’s and 80’s to raise her kids and support her husband through his tumultuous career path. After Dad’s second round of layoffs, Mom started taking jobs at churches and retreat centers as a program director and accountant. When things got really bad she took a fourth job in the form of a paper route (I was her co-pilot). After their divorce, Mom got ordained in the Episcopal church and began her journey in prison ministry.

One of mom’s jobs included room and board, so when it came time to divide assets in the divorce, Mom let Dad keep the house and in exchange kept his life insurance policy. Mom lived a very Spartan lifestyle for the years between her divorce and my Dad’s passing. As a first year teacher I out-earned her by a few hundred dollars, not including my plush public school health insurance plan.

When Dad died, Mom received a modest life insurance payout. Rather than using it to upgrade her Nissan Sentra, she spent not one dime, and did something my Dad was never willing to do–she learned to invest in the stock market.

Fast forward 17 years: Mom is living a life she couldn’t have imagined for herself just 20 years earlier. She’s not fantastically wealthy, but she’s free; free to do what she wants, when she wants, for however long she wants. She treated herself to a retirement home, where for the first time since she was a very young child, people were taking care of her for a change. And about every week or so I call her or she calls me and she says the same thing: “Oh Ted, I’m just so happy.” I wish that kind of ending for my dad. But you can’t influence the past, only the future.

I tell you this story to illustrate two things. First, assuming you’re a regular reader of this site, you might wonder why after long periods of silence I find myself writing about finance. In my last post I explained why I have become much more visible in my interest in investing. I find myself considering others’ stories, be they stories of companies, governments, consumers, or other investors doing meaningful things, and I find those stories increasingly relevant to the world around me, partially I believe, because I’m beginning to connect my investor identity to my other identities. And if I don’t write them down, these threads slip away as the next “big event” tumbles across the CNBC chyron.

Second, I wanted to share the lens through which I see the world of investing, through the lens of my parents. My dad had the intellect, the access and the resources to increase his odds of financial independence, but he didn’t. My mom scraped and saved and when a modest windfall hit, she learned what she needed to learn, and through a very conservative investing philosophy, she achieved financial independence in just 15 or so years. Dad was skeptical about the market. Mom had faith in responsible leadership of American businesses. Dad relied on his salary to provide for his family. Mom leveraged the wealth-creating potential of share ownership in a handful of companies. She also had a great gift, the greatest gift, which is the element that is most meaningful to me and to anyone reading this. She had time.

Faith, time, and a reasonable amount of homework. That’s what it took to change my mom’s story. Mom’s story can be anyone’s story. It’s the story I want for my family. It’s the story I share with my students as they begin their investing journey. It’s the story I share with my colleagues as they fear that a career in education won’t be enough to provide for their families.

What’s your story? Who’s writing it?

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