History of a Financially Literate Late Bloomer to a Do It Yourselfer
By Steve Schullo
I have been a do-it-yourself (D.I.Y.) investor for over 25 years. I manage my money without professional help because I was once taken advantage of by an insurance agent. I had to learn to invest because it was my only choice.
I was in my early 40s, finances and Wall Street were matters I was never interested in, but what a turnaround! I became involved because I was sold an expensive and inappropriate retirement product. This insurance agent took full advantage of my financial naivete so she could get a $4000 commission. I vowed that would not happen again. Many years later, I authored my story in two published personal finance books to warn others, and to assist in becoming a D.I.Y.
Wall Street Week
How did I discover the magic of investing back in those “dark ages” before the internet? I did it the old- fashioned way— by reading books and magazines. At the time, Wall Street Week was the only television show 100% dedicated to stocks, bonds, and the stock market. The host, Louis Rukeyser, was legendary. He had a unique combination of humor and seriousness. In one interview when asked about the success of his show, Rukeyser quipped, “You have to speak English!” He was serious.
So, I embarked on managing my portfolio without an adviser. Along the way to success, I made a number of mistakes which I detailed in the book, Late Bloomer Millionaires. But in the end, I still retired at 61—earlier than most Americans in my boomer generation. I had plenty of money saved and invested to supplement my teacher’s pension benefit. For the last 12 years, my D.I.Y. status saved my butt during 2008, when I only lost 11.8%, when millions of investors lost up to 40%! Because I learned from the previous tech crash, my portfolio was adequately diversified to get me through, and, most important, take advantage of the next bull market. I had learned from my mistakes how to be better able to manage my money rather than leave it to somebody else. It is that simple.
Were You Angry at Wall Street?
Since I retired 12 years ago, things have changed: investors do not trust the financial industry and their cronies, especially after the 2008 financial debacle. I remember reading reports that reflected people were angry at Wall Street. People thought their financial advisers were supposed to protect them from losses by getting out before he crashes occurred. During the technology disaster, nobody saved me and my portfolio from losing over a million.
While I don’t know if 2008 did to millions of investors what that insurance agent did to me, but the outcomes are similar. Many Americans had two options. The first was well-publicized—they got so spooked by 2008 that they sold their holdings and put them in safe money market accounts. To make matters worse, investors left about $2-3 trillion languishing in those overly safe accounts and missed out all those great returns during the longest subsequent bull market in history from 2009-2019. The second option for younger investors was the creation of the F.I.R.E. movement.
Financial Independence Retire Early F.I.R.E. or just Financial Independence (F.I.)
If there was anything advantageous to come out of 2008, it was the F.I.R.E. movement! Tens of thousands of millennials are paying close attention to their finances. Young millennials have witnessed firsthand what their parents went through in 2008. Young adults had to return home to live, because of job losses, while others encountered stratospheric college loan debt. They vowed to not let what happen to their parents happen to them by doing something now to protect themselves for future economic disasters.
Books, blogs, and websites, and are available on every internet “street corner.” I was an associate producer of a documentary titled, Playing with FIRE, which showed all the major players helping the primary stars, and a young couple, and their transition from stressing out over their former high standards of living to live a less stressful life. The movement leaders showed this young couple how to live frugally and invest in low-cost index funds without an adviser for the simple goal of retiring early. They all want to be financially independent in their 30s and 40s, years earlier than my boomer generation.
They want to do the things we all desire with complete financial support:
- Spend more time with family/friends.
- Start their own businesses rather than work in stressful jobs.
- Travel.
- Live out their dreams and values.
- Pursue hobbies.
They took what my generation has already done about our retirement years of doing the same positive activities but took it one colossal step more by planning many years sooner than at age 65. My generation still thinks age 65 as the “normal” retirement age. Millennials want to be financially independent at a much earlier age. Some achieved that F.I. status at age 30. The most famous and credited for starting this movement is the super frugal guy Mr. Money Mustache.
I can identify with the idea that nobody is going to take care of us better than our own personal commitment and passion for managing our life. The best decision I ever made was to study and learn how to invest in stocks and bonds. The millennials suffered from huge college tuitions, job loss after the Great Recession, and seeing their parents needlessly suffer from their employer-sponsored retirement plans, 401ks, burning up. Perhaps that insurance agent did a good thing for me, as all those adverse events did it for the millennials.
Psychology is a HUGE Advantage
I didn’t know when I started that I had a head start on my financial literacy. Learning about the stock and bond markets and how they worked involved not only costs, asset classes, diversification, and risk, but also knowing how the mind and emotions react to negative and positive experiences. My formal education, training, and experience with psychology and my personal therapy gave me a huge advantage to understanding how to respond when financial markets declined. Without emotional intelligence or psychological literacy, financial literacy may not be enough. Anyone who can read a blog about asset allocation can construct a properly diversified portfolio.
They want to do the things we all desire with complete financial support:
- Spend more time with family/friends.
- Start their own businesses rather than work in stressful jobs.
- Travel.
- Live out their dreams and values.
- Pursue hobbies.
They took what my generation has already done about our retirement years of doing the same positive activities but took it one colossal step more by planning many years sooner than at age 65. My generation still thinks age 65 as the “normal” retirement age. The millennials want to be financially independent at a much earlier age. Some achieved that F.I. status at age 30. The most famous and credited for starting this movement is the super frugal guy Mr. Money Mustache.
I can identify with the idea that nobody is going to take care of us better than our own personal commitment and passion for managing our life. The best decision I ever made was to study and learn how to invest in stocks and bonds. The millennials suffered from huge college tuitions, job loss after the Great Recession, and seeing their parents needlessly suffer from their employer-sponsored retirement plans, 401ks, burning up. Perhaps that insurance agent did a good thing for me, as all those adverse events did it for the millennials.
Psychology is a HUGE Advantage
I didn’t know when I started that I had a head start on my financial literacy. Learning about the stock and bond markets and how they worked involved not only costs, asset classes, diversification, and risk, but also knowing how the mind and emotions react to negative and positive experiences. My formal education, training, and experience with psychology and my personal therapy gave me a huge advantage to understanding how to respond when financial markets declined. Without emotional intelligence or psychological literacy, financial literacy may not be enough. Anyone who can read a blog about asset allocation can construct a properly diversified portfolio.
Fiduciaries are Valuable for helping you stick with your plan, But….
Professional help is costly even for the fee-only fiduciaries. Below is a table of what a typical financial adviser who manages your portfolio would cost in dollars.
My portfolio is more than the 7-figure example in the table. I pay a minuscule $1,100.00 per year. If I paid a 1.0% typical AUM fee to a fiduciary, I would spend a staggering $17,689.00. Multiplied by five years, and that’s the money I paid cash for a new Tesla. Let me ask you, what would you rather pay to manage your $500,000 portfolio, $5,350.00 to an adviser, or $350.00 as a DIYer?
Hire a Qualified Certified Financial Planner
If you are a newbie, my suggestion is to hire a fee-only fiduciary from either Garrett Planning Network, National Association of Personal Financial Advisors, or XY Planning Network. After signing the fiduciary oaths, pay them what they charge but for the sole purpose of learning from them, and helping you stick with your plan. Pay their high fee for two or three years and call it tuition as if you are taking a college course. The difference is that you and your portfolio are the subjects. Then go off on your own. I hired a fee-only adviser and paid him his hourly fee to look at my portfolio back when I was learning diversification from the Bogleheads forum and from reading. I paid about $300.00 for a couple of hours of work. It was well worth it for my continuing education to be a DIY.
Late Bloomer
Managing my portfolio took years to learn and apply, and I was a late bloomer. But it was worth every minute of my time, and it does not have to take that long for you. Many financial blogs exist today from young people who have already achieved F.I. They help you on the appropriate investing road to reach your goals and perhaps achieve F.I. at 40 or younger.
Negative experiences (setbacks, disappointments, health issues, natural disasters, stock market crashes, getting sued, fired, divorced, suffering the death of a spouse, or loss of a good-paying job) happen to everyone. But your emotional intelligence will help you learn from the experience, so you realize that there are long-term benefits even from negative experiences.
Find Your Meaning, life’s purpose
Books have been written about the simple adage is that it’s not life’s unpleasant surprises that we fail, it is how we react to it. Viktor Frankl wrote his most famous book, Man’s Search for Meaning. His three-year horror experience in four Nazi concentration camps is the epitome of how to react to terrible things. Of course, his experience is 100 times worse than anything negative that happened to me during my lifetime, including getting wounded in “Nam,” surviving cancer, getting fired/laid off, and recently losing the love of my life.
Welcome to the “Club”
If you read my blog and are wondering, allow me to say that there is no turning back now. The days of financial illiteracy are over for you. Like it or not, you are on your way to managing your money and becoming a DIYer. Welcome to the club. Congratulations!
References, Citations, and Quotes
Don’t take my word about the impact of psychology, temperament and emotions are oftentimes more important than that prestigious MBA, CPA or economic degrees from Ivy League Universities.
- These investment greats have said that “patience, be a long-term investor, be prepared financially and psychologically” by the late, Sir John Templeton, on the show Wall Street Week.
- Benjamin Graham, the professor of Warren Buffett wrote 50 years ago in his massive 500-page tome, The Intelligent Investor, “we have seen much more money made and kept by “ordinary people” who were temperamentally well suited for the investment process than by those who lacked this quality, even though they had extensive knowledge of finance, accounting and stock market lore.
- Warren Buffett learned from his teacher and agreeing with Ben Graham when Buffett said for years: “that IQ isn’t the single defining factor to successful outcomes.”
- “I’ve discovered that emotional intelligence has a much bigger impact on the success or failure of investors than where they went to school or how complex their investment strategy is. Morgan Housel
Steve’s BIO
Stephen A. Schullo, Ph.D. (UCLA ’96) taught in the Los Angeles Unified School District (LAUSD) for 24 years and UCLA Extension teaching educational technology to student teachers. Steve wrote investment articles for the United Teacher-Los Angeles (UTLA) union newspaper for 13 years. He has been featured and quoted in many mainstream media articles about 403(b) plans, including the Los Angeles Times, NY Times, and U.S. News and World Report. He co-founded an investor self-help group 403bAware for teacher colleagues and wrote 7,500 posts in three investment forums since 1997. He testified at California State legislative hearings and honored with the “Unsung Hero” award by his teacher’s union for his retirement planning advocacy.
For the last 14 years, he serves as a volunteer on LAUSD’s Investment Advisory Committee as a “Member-at-Large” and former co-chair. The committee contains collective bargaining reps from the unions and monitors the district’s tax-deferred retirement plans, 457b/403b, of 55,000 former and current LAUSD employees, worth $2.8 billion in total assets.
He started this blog in 2012 to help all PreK-12 public school educators nationwide, especially his Los Angeles Unified School District colleagues. He belongs to a small national group of 403(b) advocates (mostly teachers) who want to bring closer attention to the 403(b). During the last 25 years, 40 newspaper articles have been published and each one says the same thing, TSAs (Tax Sheltered Annuities) are terrible 403(b) plans and the salesperson gets the benefit from lucrative commissions and high-costs. Nobody in educational leadership reads these articles NOR talk about the proper place for annuity products publically. We come together at 403bwise.com and 403bwise Facebook page https://www.facebook.com/groups/349968819000560/ Come on over if you want to join us so we can help our colleagues avoid these self-conflicted and high-cost Tax-sheltered Annuities (TSAs).
Steve is the author of two books, Late Bloomer Millionaires and Fighting Powerful Interests: Educators Challenge Tax-sheltered Annuities and WIN!, a story of how a handful of LAUSD educators struggled for years to improve the 403(b) to no avail. But we never quit! We were instrumental in LAUSD’s implementation of the new 457(b) plan and earned a very rare, but very precious “Plan Design” award.
For a copy of both books, email Steve at steve.schullo@latebloomerwealth.com and he will happily email you both books, FREE with no obligation except to read them and get informed, in a pdf file format.