Broker Check

Wealth Building 101: Coming to Terms

May 28, 2018

There are all kinds of terms and abbreviations associated with investing.
We have:

ROI – Return on investment

P/E – Price earnings ratio

IRR – Internal rate of return

Alpha – The return on an investment above and beyond that which is represented by a market index or some other measurement of market performance as a whole.

Beta – A measurement of volatility of a stock or group of stocks, when compared to the entire market.

These terms, and the concepts they engender, are important. However, What I had in mind here was the very nature of investing itself. An article I recently read truly sheds light on the subject.

It seems a legal secretary, who grew up in Brooklyn during the Great Depression, had investments totaling 9 million dollars at the time of her death. It appears she left the bulk of her estate to charity.

This legal secretary, who went to work at a law firm in 1947, was still working at 96 years of age. In fact, the article states that at that age she went to work during a snowstorm. According to the article, she built her wealth by making investments based on what the lawyers in her firm were investing in.

What do I take away from this article? 

1.) Work a long time.
2.) Save money.
3.) Invest it.

Some might say that this woman “hit it big” by mimicking the investments of sophisticated individuals. That may be true, in part. However, considering that she grew up during the Great Depression, I surmise that she developed a keen understanding of the value of money. Consequently, she saved money and she worked a long time.

We can know all the important terms associated with investing. We can constantly be on the lookout for value. However, if we do not work and save money, we are very, very unlikely to have any money to invest and that is what we must come to terms with first.

This is good news. Because it means that a diligent individual, one who works and saves and does not get drawn in by the siren song of rampant consumerism, can work towards putting together a powerful portfolio of investments that can aid them in living their dreams, be that giving money to charity, traveling, or helping their family.

You might consider speaking with a qualified financial professional, whom you trust, about putting together such an investment portfolio.

You can find the article I mentioned here:

Scott R. McGimpsey May 28th, 2018

This material was prepared by Scott McGimpsey and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources, however, we make no representation as to its completeness or accuracy. Neither Summit Brokerage Services Inc. nor Scott McGimpsey is engaged in rendering legal, accounting, or other professionally services. If such assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any federal, state, or municipal tax penalty. Moreover, a diversified portfolio does not assure a profit or assure protection against loss in a declining market. UNIFIED PLANNING GROUP is an independent firm with securities offered through Summit Brokerage Services Inc., Member FINRA, SIPC