My father died last week. His death was neither unexpected nor tragic (he had been sick for a long time, and he passed peacefully in his sleep, which was a blessing). But it doesn’t lessen the void in my heart. As the father of three young men, it pains me to think they will someday feel this same void in their lives. I can only hope that I have been and will be half the father to them that my father was to me.
My father taught me so many things, probably including things I don’t even yet recognize. He was a perfectionist, but he held himself to a higher standard than he held anyone else. I learned from watching him, from things he told me, and from mistakes he allowed me to make while he was watching. I know it must have been hard for him to stand by silently while my younger self repeatedly ran headlong into my arrogant choices. But he was always there to help when I needed him.
As to money, my father excelled overall. He came from a family with nothing, and built a very successful career (and portfolio). But he certainly was not perfect. I’ve learned as much from his mistakes as I have from the things he did right.
My hope is that you, my investing friends, can also learn something positive from his life. Here are some of his lessons:
1. You don’t need to have a huge amount of money to have a great life. My father came from a small-town farming family. His mother (my grandmother) pinched pennies with the best of them – she was known to be so good with coupons that she frequently returned from the store with her purchases AND more money than when she arrived. His parents never earned more than $10,000 in a year, yet they put each of their four kids through private college or vocational school. At the end of their lives, my grandparents were able to leave a six-figure inheritance to their kids, plus rental real estate. Canning, home gardens and backyard fruit trees, driving cars into the ground, doing your own home and car repairs, repairing your clothes, reading books from the library instead of buying them – all of these lessons were passed down to my father, and through him to me.
2. Take care of your health. Heart trouble has stalked our family for generations, and yet we haven’t always heeded the warnings of our forefathers. My father didn’t live as long as we expected, to a great extent due to his failure to take care of himself after he retired. He loved to eat and drink, but he didn’t choose well in his diet, and he didn’t exercise when he got older. He probably lost 10 good years because of poor lifestyle habits. My father’s relatively early death slaps me in the face with this unavoidable truth – my investing and my career are important, but they pale in comparison to my health. I need to invest in my health if I want to be around to enjoy the fruits of my labor.
3. Hard work is the foundation for everything. Weekends were for working with my father when I was a boy. From the age of 7 or 8, I was up early mowing the grass, weeding, hauling trash, washing the cars, cleaning out the garage, painting, helping my father build or repair countless things, cleaning the pool, and crawling up into the attic to run wires (I can still hear him repeatedly yelling “walk on the joists!” so I didn’t fall through the drywall when I was up there). As a kid I often hated those weekends, and complained bitterly about how other kids got to relax while I was working. But to this day (as a 53 year old professional), I am generally the hardest working person in my business. Moreover, I have never been afraid to get my hands dirty or do menial jobs, which my clients see and greatly appreciate. These weekends ultimately constituted investments in me, and many of my professional successes stem directly from those experiences.
4. Don’t be “penny wise and pound foolish.” This is one where my father’s limitations held him back. He would often brag about the few cents he would save buying day-old bread or meat on the last day before it expired. And he would spend a lot of time (like his mother) with coupons, shopping around for the best price. But he made a six-figure income for most of his career, and he had never seen that kind of money or known how to manage it. He spent countless thousands of dollars on boats (at least three that I can remember) and cars (countless, including convertibles, Jeeps, and Cadillacs). He enjoyed his toys! But those expenses dwarfed the savings from cutting coupons and finagling a fifty-cent discount on returned items at Eckerd Drugs.
5. Have balance in your life, and don’t let your job define your identity. Hard work is important, and if you take on a project, you have to do it right, and work until the job is done. But that doesn’t mean you have to work around the clock. My father got up around 4 am every day. He was in the office by 6 am, and early in his career he often worked until 6 pm or 7 pm at night. Later in his career, however, while still getting up early, he would eat lunch at his desk, and was home by 3 pm or so most days (before we got home from school). He came to EVERY SINGLE ONE of my sports events, recitals, school plays, graduations, and other important events in my and my sibling’s lives. He often told me ultimately an office is just a place to pick up dollar bills – “work to live, rather than live to work.” Of course, when working he expected you to do the job the best you could, and produce superior results. But he would not allow his job to overshadow his family or his own life.
6. Don’t try to time the market. My Dad retired early in roughly 1994. He excelled in his career and had a decent amount of money on which to live. His bank balances at the end of his life were roughly the same as those on the day he retired. But he made one mistake that cost him a lot of money. After the 2008 crash, he instructed his financial advisor to “take his money out of the market.” He didn’t want to risk further losses. The market has more than tripled since then, which means his desire to avoid further losses cost him a significant amount of money. At the end of his life, my father could have used that money. He needed “round the clock” care, and we had to put him into a nursing home. If he had kept even some of his money in the market, we might have been able to keep him at home.
7. Don’t let emotions ruin your finances. See number 6 above. But there is more to this lesson. Dividend FIREman comes from a genetic line that (for better or for worse) allows us to experience emotions very strongly. This often gives us great elation and joy, but it also causes us to have pretty deep emotional valleys. At both extremes, our financial decisions (mine and my Dad’s) have sometimes been less than great. Running scared from bad market performance was probably my father’s worst emotional decision relating to money. I have stated in prior writings that I will devote future posts to some of my bad financial decisions, which usually come from a combination of lack of knowledge and hubris, but sometimes come from reacting to strong emotions. As a teaser, I once bought an expensive new truck after a series of “money control” arguments with my wife (now ex-wife). That impulsive decision cost me money, plus lots of time. Don’t let your emotions wreck your financial plan!
8. Annuities are a gamble on how long you will live. My Dad took a good chunk of his retirement money and purchased three “life with ten years guaranteed” annuities in late 2007. He died in January of 2018. The payouts on these annuities were a bit less than he paid in, and the money is now gone forever. Despite his poor health habits, my father expected that his genetics would trump his lifestyle choices. His parents both enjoyed lives that were significantly longer than average, and I know he thought he would outlive the annuity guarantee period. My father was an exceptionally intelligent man, and certainly understood the annuity and how it worked. He opted for higher payments, figuring he would live well beyond the time he needed to make money on the deal. He didn’t. Remember that whereas with life insurance, you are betting you will die tomorrow while the company is betting you will live forever, with annuities you are betting you will live forever while the company is betting you will die earlier. Putting aside all of the other issues we hear about annuities (high costs, lack of control, etc.), buying an annuity is a gamble at the end of the day, at least with the kind of annuity product my father bought.
9. Cars are depreciating assets. Oh how we have enjoyed our cars! My father at various times purchased a brand new Jeep, a ragtop roadster, Cadillacs and Lincolns, and lots of other great cars during his life. I have run the numbers a few times, and even if he had only invested half of the money he spent on those cars, conservatively we would be looking at over $200,000 in invested assets today. Did he have $200,000 worth of fun with those cars? I will answer “maybe,” knowing that he really liked those cars. But man it was a lot of money with nothing to show for it in the end. In my own earlier life, I roamed the streets in a series of progressively more expensive power cars. I did get transportation, freedom, and lots of enjoyment out of those cars, but I really couldn’t afford many of them. And the cars are long gone, along with the money. Watch out for big purchases!
10. Take care of your family. This one is the hardest to write about, because it hits closest to home. From the time I can remember, my father took care of us. He made sure everyone had a full plate before he ate. He installed security lights and alarm systems himself, and made sure they were on every night. He checked the doors and windows before bed. He paid every bill on time (I don’t think he was ever late with a payment in his entire life). Cars were always topped off with gas and functional, and our electronic toys somehow mysteriously got plugged in and charged every night. He was always the first person up every morning, getting an early start on the day. Most days he would leave us notes about what to do that day, before he left for work. Christmas mornings, birthdays, and other holidays were filled with attention and abundance. My father never really said he loved us, but his actions spoke loud and clear.
My father’s departure leaves a void that will never be filled, but I am privileged to have known my Dad and learned from him.