Help Me Retire Podcast - Episode 3
- Mike Brown
- Jul 3, 2024
- 10 min read
Updated: Jul 5, 2024
Three investors
Show notes:
This is the Help Me Retire Podcast… with your host… Mike Brown… Senior Wealth Advisor with Raymond James Financial Services… and head of Brown Family Wealth Advisors…
Mike is the best-selling author of Your Way to True Wealth: How to Make It Happen, Make It Last, and Make It Matter…
Mike and his team have been helping clients pursue their dreams of financial independence for the past 30 years… and in the Help Me Retire Podcast… he’ll share his best ideas with you…
And now… here’s Mike…
Wherever you are in pursuit of True Wealth…
Building wealth…
Seriously considering retirement… planning transition…
No longer working… trying to make money last… and make it matter…
Weekly ideas in our free e-letter: Wealth and Wisdom o Web site: brownfamilywealthadvisors.com or brownfwa.com…
If you’re looking for specific advice on how to retire… you’ll find a wealth of material on our educational website… helpmeretirepod.com…
You can also get back issues of our weekly e-letter… Wealth and Wisdom… on the site…
As well as the quarterly webinars we put on for our clients… you’ll find those recordings there also…
Brown Family Wealth Advisors is also on Facebook and LinkedIn…
We’ve got lots of ways to help you retire…
I want to tell you a story today… actually three different stories… about three very different people who acquired great wealth in three very different ways…
I believe there are lessons we can learn from all three…
JACK WHITTAKER was a 55-year-old contractor… a self-made success… who pulled into a convenience store for gas on Christmas Eve… 2002…
He went inside to pay and ordered a breakfast sandwich at the counter…
That’s where Jack also bought what would turn out to be the winningest Powerball ticket ever sold up to that time… worth nearly 315-million dollars…
He took the lump-sum option… and walked away with more than 113-million dollars… after tax…
Jack’s life as a mega-millionaire started off pretty well…
He pledged 10-percent of his winnings to build two churches…
He started the Jack Whittaker Foundation with 14-million dollars… to provide food and clothing to low-income families in rural West Virginia…
He granted college scholarships to local students…
He even went back to that convenience store… where he had bought that lucky lottery ticket… and bought the deli clerk a new house… a new Jeep Cherokee… and wrote her a check for 44-thousand dollars…
Then Jack Whittaker bought himself a Lamborghini…
A few weeks later… he was seen driving it through his neighborhood throwing cash out the window…
A month after buying the winning ticket… Jack was arrested for drunk driving… and it wouldn’t be his last brush with the law…
Less than a year after Jack won the biggest lottery in history… while he was in a strip club… thieves broke into his Lamborghini… and stole more than half-a-million dollars cash he’d been carrying around in a suitcase…
Six months later… thieves broke into the car a second time… and stole another 200-thousand dollars…
And that’s when things really started going south…
Jack had put his teenage granddaughter on the payroll… to teach her how to handle money… but it only attracted the wrong kind of people…
Later that year… the granddaughter’s 18-year-old boyfriend was found dead of a drug overdose in Jack’s home…
Three months after that… his granddaughter was found dead of a suspected overdose… her body dumped in a junkyard…
Over the next several years…
Jack also got sued multiple times… one case involving three female casino employees who accused him of assault…
Caesar’s casino sued Jack for bouncing a one-and-a-half million-dollar check to cover gambling losses…
His house burned down…
Excessive drinking started taking a toll on his health…
And by 2007… barely 5-years after he had won the largest lottery jackpot of all time… it was all gone…
133- million dollars… the Lamborghini… all gone… (PAUSE)
And in the year 2020… following a long illness… Jack Whittaker died broke and mostly alone… at age 72…
He was quoted often over the last 17-years of his tortured life… as saying he wished he had torn up that lottery ticket…
Sudden… unexpected… unearned… wealth destroyed his life…
Sadly… there have been lots of other Jack Whittakers over the years… all with very similar stories…
Wealth that came easily… that was impossible to truly enjoy… at least not for very long...
Now… ANNE SCHREIBER’s was a much different story in almost every way…
Anne never won the lottery… highly unlikely that she ever bought a ticket…
She worked as a tax auditor for the I-R-S… for 23 years… and in all that time… never received a promotion…
Never earned much money… in fact… the year she retired… 1941… her salary was just 3-thousand-150 dollars per year…
Anne was also what you might refer to politely… as a unique person…
She lived alone… in a tiny… rent-controlled… studio apartment in New York City for most of her adult life…
Never married… or even dated… to anyone’s recollection…
She had few… if any… close friends…
A recluse…
And Anne Schreiber… was obsessively… frugal…
She walked to work every day… even in the rain… to save the bus fare…
Never took expensive trips…
She was known to wear the same clothes almost every day… black coat… black hat… winter and summer…
She skipped meals… pinched pennies…
So obsessed was she about how she spent money… that she was able to save 80-PERCENT of her meager salary…
In her job… Anne got to learn a lot about money… how to save it… how to invest it… how to pay less in taxes…
And that led to her second obsession… using all of the money she’d been saving… to buy shares of stock in companies she admired…
Brand-name blue-chip companies… companies that made things that people wanted to buy… had to buy…
Companies that also had a policy of sharing their profits with stock-holders… in the form of cash dividends…
She studied these companies in the public library… comparing her numbers with those of Wall Street research reports supplied by her broker…
And once Anne bought those shares… a few at a time… she hung onto them… through good times and bad…
Besides… selling them would mean another commission that she would just as soon avoid…
As she began to accumulate more shares… she started earning more dividends…
And she discovered that she could use those dividends to buy even more shares of these companies…
She learned the magic of compounding… putting the power of money to work making more money… (PAUSE)
And after doing this for more than two decades…
Anne’s frugal lifestyle allowed her to do something almost unheard of at the time…
Especially for a woman on her own…
She was able to retire from the I-R-S early… in her early 50s as a matter of fact…
She qualified for a full pension… a whopping 31-hundred dollars a year…
And guess what? She continued to save most of it… using the money to buy still more shares of her favorite companies…
By the time she retired… her stock portfolio had grown to more than 5-thousand dollars…
But then… she started to get really serious about investing…
She had more time to do her research…
She started going to shareholder meetings… started asking tough questions of C-E-Os and chief financial officers…
And when she left those shareholder meetings… she was often seen carrying out… a bag full of food from the buffet…
This went on for a very long time… because…
Anne Scheiber spent the next… FIFTY… YEARS… in retirement…
Saving… researching… investing… earning dividends… reinvesting those dividends… compounding… for half a century…
In early 1995… at the age of 101… Anne passed away… alone…
According to her broker… one of the few people who communicated with her after she retired… Anne died without one real friend…
In fact… it was said that she didn’t receive a single phone call during the last five years of her life…
A few weeks later… they read Anne Scheiber’s will…
She had been estranged from her family… other than one niece who checked on her from time to time… had no friends or acquaintances…
And this lonely woman… who never earned more than 4-thousand dollars a year… left that niece… 50-thousand dollars… (LONG PAUSE)
And she left 100-thousand dollars to an Israeli educational group… (PAUSE)
And 22… MILLION… dollars… to Yeshiva University… a school in New York City that she had never even attended…
Where to this day… young women are still attending college on the Anne Scheiber Scholarship…
Jack Whittaker… and Anne Scheiber… two very different multi-millionaires…
One acquired wealth the easy way… couldn’t hang onto it… and let it destroy his life…
The other acquired wealth the hard way… a dollar at a time… but let her obsession consume her life…
And for all those millions… I’m not sure I would trade places with either one of them… would you
And now… to our third and final investment story…
This one is about a married couple… someone you might even know…
If you’re a client of ours… it’s possible you’ve met them… and even if not… I’ll be you have some things in common with these folks…
Their life’s experience is very typical among the clients we’ve worked with over the years…
This couple also started with practically nothing…
Didn’t marry into wealth…
Didn’t inherit a fortune…
Didn’t win the lottery…
They went to work in the morning… came home at night…
Never earned big incomes…
All they wanted was to pay their bills… provide for their kids… enjoy their lives…
And get to a point where one day… they could stop working for money… and let money work for them…
To get to that point… they decided to adopt a series of very simple habits…
Habit number one… this couple decided that whatever money they earned… no matter how little they started with… or how high their incomes grew… that they weren’t going to spend it all…
They were always going to live on less than they earned…
Habit number two… they invested what they saved… they put it to work…
And like Anne Schreiber… they looked for investments that had the potential to increase in value…
But they also made sure those investments paid regular… and rising… dividends that they could reinvest… and compound…
And that led to habit number three… once they discovered the immense power that money has to reproduce itself… they promised themselves that they would never interrupt that process of compounding…
They wouldn’t try to predict the future… or outguess the markets…
When stock prices dropped sharply… as they do from time to time… they learned not to treat it as a risk to be avoided… but as an opportunity to buy more shares at lower prices with the same amount of money…
The fourth habit this couple developed… was to get out of debt as quickly as they could…
That took them many, many years… but once that debt was gone… they knew that all of the money they were saving would be compounding for them… instead of against them…
While their liabilities were shrinking… their assets were increasing… which made their net worth increased even faster…
This couple followed those simple habits for most of their adult lives…
Living within their means… compounding wealth year over year… paying down their debts…
They paid their bills on time… provided for their kids… and found ways to enjoy their lives…
They didn’t look at their investments every day…
But as they grew older… they started to notice something…
In a typical year… their portfolio was growing in value… at multiples of what they were saving each year…
More importantly… even the dividends those investments were producing each year… had become several times as much as what they were adding each year…
And because the companies they invested in were growing… so were the dividends those companies paid…
So, their portfolio income was growing every year… faster than inflation…
Eventually… this couple made a startling revelation…
They foresaw that within a few years… that investment income… when added to Social Security and a small pension… would be enough to replace the salaries they were earning from working…
And when that day arrived… they would be able to stop working… or at least to stop working FOR MONEY…
From that day forward… they would have the freedom to spend every day exactly the way they wanted…
The work might stop… but the paychecks wouldn’t… their income would simply come from a different source…
They would know the joy of not owing anybody anything… to be beholden to no one…
They would never again have to think about things that don’t matter… and instead by able to focus on the things that DO…
We have a name around here for that day… we call it True Wealth… and it’s the common… universal goal of every client we work with…
The best part about defining wealth that way… is that each of us gets to decide when that day has arrived…
We decide how much we’ll need to spend to support the lifestyle we choose to live…
And by looking at the income our investments are producing… we can see… at any point in our lives…
We can see just how close to True Wealth we are…
So, when that day arrived for this couple… they decided to stop working for money altogether…
For lack of a better word… they retired… (PAUSE)
But unlike some of their friends… this couple was able to live off the income their investments were producing… in addition to whatever they’d be getting from Social Security…
They wouldn’t have to follow the so-called… four-percent rule… which calls for systematically liquidating your life’s savings in retirement… hoping you die before the money runs out…
They also didn’t have to turn their life’s savings over to an insurance company… that promised them lifetime income guaranteed never to go down… but also guaranteed never to go up…
Our couple knew that their cost of living would continue to go up in retirement… so they wanted their investment income to go up just as much… or more… over time…
And they wanted to live off that income… instead of slowly eating away at their principal…
Today… they keep their focus on that rising stream of income… instead of the daily ups and downs of stock prices…
Or as they put it… we’d rather think of our investments as an escalator… rather than a roller-coaster…
One day… I expect this couple to realize the last objective of their lifelong dream…
By living off the income their investments produce…
They should be able to use most… if not all of the principal… to keep taking care of their family… their children… their grandchildren…
They want to endow future generations… and support the things they believe in… the causes and institutions they care deeply about…
I had this couple in mind when I wrote my book… Your Way to True Wealth… and they embody the book’s sub-title…
They made True Wealth happen…
They made it last…
And now they are making it matter…
I hope you can, too…
Thanks for your time today… and we’ll talk again soon…
Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC.
Investment advisory services are offered through Raymond James Financial Services Advisors, Inc. Brown Family Wealth Advisors is not a registered broker/dealer and is independent of Raymond James Financial Services.
Any opinions are those of Mike Brown and Brown Family Wealth Advisors and not necessarily those of Raymond James. This material is being provided for informational purposes only and is not a recommendation. There is no guarantee that these statements or opinions will prove to be correct. Investing involves risk, and you may incur a profit or a loss regardless of the strategy selected. Prior to making an investment decision, please consult with your financial advisor about your individual situation.
