The story of 2 investors

This true story I found in an online journal depicts the magic of compounding and the impact behavior has on our finances.

Grace Groner and Richard Fuscone

Grace Groner was orphaned at age 12. She never married.
She never drove a car. She lived most of her life alone in
a one-bedroom house and worked her whole career as a
secretary. She lived a humble and quiet life. This made the
$7 million she left to charity after her death in 2010 at age
100, all the more confusing. People who knew her asked:
Where did Grace get all that money?

Grace took humble savings from a meager salary and
enjoyed eighty years of hands-off compounding in the stock
market. That was it.

Weeks after Grace died, an unrelated investing story hit
the news.

Richard Fuscone, former vice chairman of Merrill Lynch
declared personal bankruptcy, fighting off foreclosure on
two homes, one of which was nearly 20,000 square feet
and had a $66,000 a month mortgage.

Fuscone was the opposite of Grace Groner; educated at Harvard
and University of Chicago, he became so successful in the
investment industry that he retired in his 40s to “pursue
personal and charitable interests.”

But heavy borrowing
and illiquid investments did him in. The same year Grace
Groner left a veritable fortune to charity, Richard filed for
bankruptcy.

It is the study of how people behave with money.

And behaviour is hard to teach.

 

______________________________________
Random Useless Fact:

The first calculator was invented in the mid 17th century.

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RICARDO
RICARDO
12/20/2021 7:57 am

When I started grade one everyone had an abacus to learn how to tote up sums properly. Would any younguns know what they are these days. Didn’t even need solar power. LOL
How you live will determined the last years of your lifestyle. Unless you have a really big wad dinaro.
And then there is always the saying that if you live your life properly, the last cheque you write will bounce. You will have fully realized the potential of all those savings.

RICARDO

Sridhar
Sridhar
12/21/2021 8:11 am

Interesting and kind of different story IMO because I usually come across two type of stories – one is the tyipcal rich vs poor (rich dad poor dad type) and the other is rags to riches story. Each one tries to give a message in different ways. The above story is somewhat opposite of rich-dad poor-dad type because it shows even a normal person doing the right things can get ahead or become successful (not necessarily millionaire). The point Im trying to convey is to have one’s own personal goals and own criteria or measurements rather than just comparing networth and how much dollars you have in bank. However, if we have A (secretary) and B (investment banker), in real-life scenarios it plays in different way in some cases. A would go thru peer pressure to get the latest iphone/car because someone in her family/friends circle has one, or she may buy a home she cannot afford, because of the fear of getting kicked by landlord or rising rents, etc. Add inflation and other factors. Also she would be compared with her peers who may be more successful in careers or life pursuits and so on. The problem with A-type… Read more »

Sridhar
Sridhar
12/22/2021 6:59 am

Thank you.

Huh???
Huh???
12/21/2021 1:53 pm
Reply to  Sridhar

What did I just read?? Please don’t start a blog.

maplethrift
12/21/2021 2:14 pm

I liken the story of wealth generation to the concept of losing weight. If you think about it, it’s practically the same equation. Amongst all of the weight loss fads out there, one thing will ALWAYS remain true; calories in vs. calories out. It’s the same as wealth generation, in Grace’s case even though she was making a much less salary than Richard, she was able to save so much due to minimizing her output. Just like expending more calories than taking in calories. This concept is very simple in nature yet it’s so fascinating to see how hard it is to implement and execute lol. Yes, Grace did invest the funds but she also didn’t borrow money and didn’t spend on anything that she didn’t need.

I think the epitome of this short and sweet blog post is the exact answer to how millions of working people always wonder people like Liquid and other FIRE bloggers are able to amass large amounts of wealth. It’s quite simple honestly… and you don’t even have to start investing, just start to watch your spending and you will see results right away.

Diane
Diane
01/18/2022 11:06 pm

This was the concept they discussed in the Psychology of Money too – your money behavior ultimately determines your wealth, not your income (to a certain extent). And unlike fields like medicine or science where professionals do it better than those with no training, there’s no correlation with being a finance expert and being better with money. I know lots of other books also touch on similar concepts. It’s reassuring for us everyday investors. Thanks for the great post.

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09/05/2022 4:46 pm

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