Fast forward a little more than a decade later, and I'm trying to recruit the same person to my company. We eat lunch, and we chat. I ask if he even needs to work anymore, given what I knew of his finances, and he said, "Actually, no, I do need to work." The house he lived in was paid off, but his finances weren't in as good condition as I had assumed.
Before you think, "What an idiot. This can't happen to me." Consider this:
- In 1995, financial information was hard to find. The list of good financial books worth reading for non-experts was down to Burton Malkiel's A Random Walk Down Wall Street, which while it is as good then as it is today, was a bit of a read. (My mom still doesn't understand the book)
- Vanguard did not have a web presence then. The web brokerages were dominated by folks like eTrade, which did terrible things in executing your trades that you wouldn't want.
- Financial advise on the web was limited to The Motley Fool, which back then touted Rule Breakers, Rule Makers, and a bunch of high risk strategies.
- John P. Greaney's fabulous Retire Early Home Page, which I recommend to anyone, did not exist until 1999.
- In person financial advisers were just as ignorant and sleazy as they are today. It is common, in my experience, for even sophisticated, intelligent people to fall prey to them.
I'll close with a reflection on John Greaney's page on retirement planing:
The time I spent ... learning about financial markets were undoubtably the most highly compensated hours of my career.
Not only does the learning help you avoid pitfalls that others fall into, the learning leverages all the money you'll make in your career, giving you a double whammy as your career grows. If you're Jack Welch, John Chambers, or similar CEO/entrepreneur material, you might not need such an education, but for the rest of us, learning this stuff isn't nearly as hard as programming in C++, and is easily as lucrative.