The Secrets of Successful Investing
Suddenly the great real estate Ponzi scheme has been exposed. Panic has hit the credit markets. Not only are home mortgages difficult to get or refinance, but also businesses are being squeezed and cannot get loans, which means the economy will stagnate. The New York Stock exchange lost 1,000 points in three weeks and the sickness is contagious, affecting the markets and economies of countries throughout Europe and Asia. When America get the sniffles, the expression goes, the rest of the world catches cold.
The Sad Saga of an 81-year-old Widow
A lady I have known for more than 50 years was widowed 32 years ago and never remarried. On the death of her husband—who was 25 years her senior—she was left roughly $300,000, plus she owned a house in Connecticut that she sold for $300,000. Total nut: $600,000. She knew nothing about money—not even how to write a check or balance a checkbook, let alone how to invest her money. She entrusted her money to an old family friend who managed it pro bono. He died many years ago. Since it was a pro bono account, the firm gave it minimal treatment and it languished.
Two years ago her older brother took a look at the account and discovered that it gone from just under $600,000 down to $300,000. If she continued living the high life in Manhattan—taking expensive cruises and trips around the world, enjoying membership at an exclusive club and taking taxis everywhere—he told her that she would be a bag lady in not too long a time.
Working with an investment firm that specializes in corporate bonds, the brother—whose own seven-figure capital is primarily in these vehicles—managed to eke better than a 10% return on her money. At the same time, he moved her down south to be closer to her family and put her on a very tight budget. With $30,000 a year plus a bit of Social Security income, she would have been able to live out her days within her means in relative comfort. He actually got her little fund up to $375,000.