Charting a course of financial discipline, clarity
Most of us won't have 97 years to save and invest. But Stephanie Mucha, who recently was featured in Barron's, has. Ninety-seven long and productive years. And she has made the very most of each one.
Mucha's peak annual earnings of $23,000 were modest even in 1994, when she retired. Still, she has managed to grow her assets to more than $5.5 million. Mucha has given $3 million to charity and retains $2.5 million — still percolating — in her portfolio. Her goal: to donate $6 million before she dies.
Mucha is obviously blessed with longevity, an enviable work ethic and a high financial IQ. But she doesn't have any unusual advantages. She reads financial publications and uses good sense and, incredibly, does not even own a computer. Still she has succeeded. Fabulously.
A great many people make a spectacular living providing investment advice to individual investors. It can be argued that the pros have a vested interest in asserting their views, which can cause lay investors confusion. For example, over a matter of months I heard the same television pundit argue for, then against, and then positively again for the purchase of Apple stock (ticker: AAPL). During that time the company did not change materially, but the speculation did, and some made a great deal of money while others lost out. Our challenge, as long-term, Mucha-like investors, is to avoid falling into the trap of chasing the buy-and-sell recommendations of Wall Street.
My high school government teacher allowed students to take his multiple-choice tests three times and keep the highest score. He knew that if students guessed the first time through, they would lack the conviction to make the correct changes and likely would end up with a worse grade in subsequent attempts. . Rarely did students improve their scores. I have learned this as an investor. If I invest without full knowledge and conviction, I am more likely to sell when I should sit tight or buy more. This kind of indecisiveness can seriously and negatively impact total return, just as my high school teacher understood. Zigging when we should zag is one of the surest ways to lose money in the stock market.
Mucha understands this. She knows that investing requires staying power, in spite of the chatter. Perhaps, this is one of the advantages of not having a computer — no distractions, fewer dissenting (or self-serving) opinions. Or, perhaps, just being passionate about financial objectives creates a kind of clarity that contributes to long-term total return. Either way, it has worked for Mucha and her very long-term objective of contributing more than $6 million to charity.
Next week: goals-based investing.
Nancy Tengler spent two decades as a professional investor. She is an author, financial-news commentator and university professor; her book, "The Women's Guide to Successful Investing," is out now. Reach her at nancy.tengler@cox.net.
