Jule Kucera: Reflections

Making Up For Lost Time With Money

Episode Summary

If you inherited almost a million dollars, what would you do with it?

Episode Notes

What one daughter did with the $800,000 she inherited.

Episode Transcription

Making Up For Lost Time With Money

I’m guessing the four daughters were all happy to receive an inheritance of what I’ve estimated to be $800,000. One of them viewed it as a godsend.

This daughter was 65 years old and had lived a free-spirited life, which included not saving for retirement. She decided she needed to make up for lost time.

If she had talked to me, I would have asked her about her risk tolerance. Then we could talk about capital preservation versus growth, especially at age 65. We might have discussed budget (living beneath your means), asset allocation, dividend reinvestment, and automatic rebalancing. I hope we would have searched for a solution that matched her ability with her interest in managing her money. 

The stockbroker she invested with told her that if she wanted to catch up, the tech sector was the place to do it.

Here’s the timeline:

September 1998: Olga dies.

February 2000: Olga’s daughters each receive their $800,000 (estimated) inheritance and one daughter invests it all in technology.

March 2000: the tech bubble bursts.

Sometime in 2001: the daughter who invested in tech withdraws what is left before it all disappears. 

I’m estimating the amount inherited. But if the number my father told me is accurate and if I’m remembering it correctly, the amount remaining was $140,000. This daughter lost roughly 80% of her inheritance.

The lesson I took from this: A patient approach to investing turns out better than a greedy one.

I haven’t always been patient. There have been a few times when I’ve been greedy. 

Greedy has never turned out well.