Thursday, October 1, 1998

Lost Opportunities
by Claude1234 [email protected]

I didn't find the Motley Fool web site until just this year, at age 63 (better late than never). I have been Wise most of my life, however several Foolish events saved me from complete financial ruin. The first was that somehow, very early in life, I developed an acute aversion to debt. For many years I didn't even have a credit card. Even now, I only have one -- how unWise! You can well imagine how much money I'm saved in interest payments. I don't think my bank and credit union liked me very much, I was too Foolish in this regard.

However, I had trouble saving money. I didn't know the Foolish principle of paying yourself first. I rationalized, and many of my Wise friends reinforced my rationalizations, that all of my money was needed to raise a large family of six children. With hindsight I see that, although it is expensive to raise children, I could have saved more money than I did. Finally, at the age of 48 with only $25,000 in the bank (that is where the Wise folks told me to put it) after 27 years of work, a good friend suggested I read the book "The Richest Man in Babylon." This book taught the Foolish concept of paying a minimum of 10% of my income to myself. I thought, "What a novel concept!" I resolved to do this, which I have done for the past 15 years.

The next obstacle was to decide where to save the money (investing was still a foreign concept to me). I opted to save the money in my company's 401(k) plan since they matched the first 8% of one's savings with 50 cents on the dollar. I followed the Wise advise of placing some of my money in a stock mutual fund and the rest in a money market account. This was in 1982 at the beginning of one of the longest running bull market ever known. Too bad I wasn't Foolish enough to put all of these funds into the stock mutual fund.

So now that I am a Foolish beginner, where do I stand and where am I headed?

First, I moved all of my 401(k) funds into the S&P mutual fund option of the 401(k) plan. This is the most Foolish option I have within my 401(k) plan. I did this about mid August and saw the value of my account decease by about 15 percent by the first of September. This didn't bother me because I won't need these funds for well over five years. By then I should have a good increase.

Second, I am in the process of opening an account with a deep discount brokerage firm. I will use this for other funds which are not needed for at least five years. After this account is set up, I will indeed become a Foolish investor using the principles, such as the Dow Dividend/Unemotional Value and the Unemotional Growth investing, learned in the Motley Fool School.

Third, I feel better about my financial future now than I ever have before. You see, now that I am a Fool, financial things makes sense. Before, the Wise way, things were hard -- perhaps impossible -- to understand.

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