The Most Valuable Investing Lesson I Ever Learned

My father was never much of an investor, though he possessed all of the attributes of a potentially successful one. He grew up in a lower-middle-class family in Worcester, Mass., and never had much money to put aside as a young man. Just when he finally started earning a decent salary, he passed away suddenly.

Even though he wasn't an active stock market participant, he did make one, big investment that delivered an incalculable return for him and his family. And that particular investment, as we'll soon learn, illustrates perfectly the incredible power of having a long-term outlook.

"Without frugality none can be rich..."
Just like many of the greatest investors, my dad was an extremely frugal man. Born in 1929, his outlook was shaped by the Great Depression, and he was never one to live beyond his means. I honestly don't remember him ever charging much stuff on credit cards. We would only go on vacation when he had the cash in hand to pay for it, and we always knew it was the end of the month when steak and chicken gave way to tuna casserole and hot dogs at suppertime.

When my dad died in 1976, he left behind a generous life-insurance payout, a very manageable mortgage on our house, and no debt. Having no debt to contend with made a huge difference for my family as we tried to deal with the emotional and financial fallout from the loss of my father. To this day, I remain extremely thankful for my dad's prudence and forethought. Warren Buffett once said that the road to wealth is dependent "on two words, industry and frugality." My dad definitely had the latter one down pat.

Coddling the postman
He was also pretty solid on the former, too. My dad was "old-school" before old-school became fashionable, and like a lot of other folks from his generation, he had a tremendous work ethic. I was always impressed by the fact that he never, ever missed days of work due to illness. In fact, I can only remember one day that he was forced to return home sick -- and it was only because his company told him to go home, so he wouldn't get his colleagues ill.

I also remember him telling me after a big snowstorm when I was a little boy that I'd have to double the size of the path I was shoveling for the postman. Even as a fairly obedient child, I thought, "Does the mailman really need a perfect, three-foot pathway to deliver the mail?" Of course, I kept that question to myself -- children weren't as outspoken in those days.

I can also recall my freezing hands as my dad insisted that I get every last handful of leaves into the Hefty bag on a cold November afternoon. When it came to chores, my dad would have been right at home on Walton's mountain. Like Warren Buffett and Peter Lynch -- to name just two investing luminaries -- he was a tireless worker who would stick with a task until it was completed.

The price of normal
Those remarkable qualities allowed my dad to achieve great success with a long-term investment that ultimately transformed the future of his family and perhaps many others as well. This investment wasn't in the stock market, however. It was in a college degree.

When my father graduated from high school, he didn't have enough money to attend college. He did actually apply for several scholarships, but his applications were unsuccessful. After high school, he joined the Air Force, and after that, he got a job with a local newspaper. He dreamed of getting a college degree, however, so he signed up for night school at Northeastern University in Boston.

Despite having four kids, a full-time job, and having to undertake a three-hour round-trip commute several times a week for nine years, my dad graduated No. 1 in his night school class with a bachelor's degree in business administration. When the local paper asked him about his accomplishment, he said, "I went to school the hard way, so hopefully my kids can go to college the normal way." For my dad, a normal college experience meant being a full-time student with an abundance of time for reading, reflection, and debate.

Those must have been difficult years for both my mom and dad. But a mere 21 years after my dad completed his studies, all four of his children had graduated from college as well, earning their degrees the "normal way."

What long-term looks like
The story of my dad's quest to earn his degree is a great illustration of what having a long-term outlook can accomplish, whether it's in education, investing, or any other pursuit. At its most fundamental level, a long-term approach requires making short-term sacrifices in return for a bigger, long-term payoff. In my father's case, he had to sacrifice precious time with his family in return for the degree and all that came along with that. The college degree eventually resulted in a higher salary for him, as well as a greater appreciation in our family of the importance of education. Both of those things were crucial for his children eventually achieving their own academic success.

In investing, having a long-term outlook might mean increasing your 401(k) contribution from, say, 4% to 8%. That short-term decrease in immediate consumption will be more than offset by having a bigger pot of capital for your retirement. When it comes to stocks, investors are often required to ignore short-term price movements while sticking to a longer-term time horizon. That's one of the keys to successful investing, in my opinion.

Often, pursuing a long-term strategy can mean thinking about something a lot larger than just yourself. For my dad, he was driven to provide greater opportunities for his kids and their kids far into the future. When the online bookseller Amazon.com (Nasdaq: AMZN  ) shared its long-term focus with shareholders back in 1997, its founder, Jeff Bezos, wrote, "We are working to build something important, something that matters to our customers, something that we can all tell our grandchildren about. Such things aren't meant to be easy." In both cases, short-term sacrifices were necessary in order to achieve huge goals that matter tremendously to multiple stakeholders.

Finally, long-term goals can often result in intangible, but extremely beneficial, outcomes. Google (Nasdaq: GOOG  ) CEO Larry Page said recently that he was always focused on the long-term, even when critics told him that "search was a solved problem and that there was no money to be made apart from some banner advertising." By sticking with its dream, Google is now a $250 billion company that has a huge impact on our world in a variety of different ways in addition to search.

On a more mundane level, my dad's goal of getting his degree resulted in college educations for his children and eventually grandchildren (though sadly, he never met the latter). And several of his descendants would become teachers who may have inspired even more individuals to pursue higher educations. Warren Buffett famously said that "someone's sitting in the shade today because someone planted a tree a long time ago." I'm extremely grateful for the tree that my dad planted for me, as well as the valuable lesson that came along with it.

John Reeves owns shares of Google. The Motley Fool owns shares of Google and Amazon.com. Motley Fool newsletter services have recommended buying shares of Google and Amazon.com. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


Read/Post Comments (31) | Recommend This Article (94)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 18, 2012, at 2:37 PM, asadkhan64 wrote:

    One of the best articles I have read on Yahoo Finance.

  • Report this Comment On October 18, 2012, at 2:42 PM, TMFBane wrote:

    @asadkhan64, Thank you! I really appreciate that.

  • Report this Comment On October 18, 2012, at 2:44 PM, TMFMorgan wrote:

    Wonderful, inspiring article John.

  • Report this Comment On October 18, 2012, at 2:56 PM, gaminsky wrote:

    Awesome article, and truer words of advice are seldome spoken. I especially loved the part where he said to make the path twice as wide for the mailman. :)

    Your dad sounds like mine, who also passed away before his time. (also Air Force earning a business degree afterward, with 5 little kids at home)

  • Report this Comment On October 18, 2012, at 4:33 PM, TMFBane wrote:

    @gaminsky, thanks for your comment. It sounds like we had very similar experiences. The days of big families definitely posed big challenges too.

    And thanks again Morgan for your comment!

  • Report this Comment On October 24, 2012, at 10:22 AM, TMFBWItime wrote:

    Great article John, very inspiring!

  • Report this Comment On October 24, 2012, at 10:49 AM, bonsaibean wrote:

    Well written, and a great lesson for all!

  • Report this Comment On October 24, 2012, at 11:17 AM, DS31 wrote:

    Someone's sitting in the shade today because someone else planted a tree a long time ago.

    I need to call my Dad...and I need to keep planting more trees!

  • Report this Comment On October 24, 2012, at 12:22 PM, buck2032 wrote:

    I can relate to your story as my father passed away before his prime. I appreciate your perspective!

  • Report this Comment On October 24, 2012, at 12:37 PM, dragonLZ wrote:

    I haven't read any articles on TMF's site for months (rarely visited the site at all), but I'm very, very glad I decided to visit the site today and click on this article. Great, great story. Wish my kids would be able to say stuff like this about me. Very uplifting.

    Thank you both to the writer of this article and his dad.

  • Report this Comment On October 24, 2012, at 1:10 PM, DufferWD wrote:

    I tell my boys these three investing strategies:

    Invest in yourself.

    Invest in your family.

    Invest in great companies.

    ...

    Sometimes all you may need to do is do the first two.

    Great article John. My boys will be reading your article while they do their homework tonight.

  • Report this Comment On October 24, 2012, at 1:21 PM, TMFBane wrote:

    Thanks for all of the great comments so far, everyone! I really appreciate them.

    It's been a nice opportunity for me to share my dad's story. Even though he was just an ordinary guy, he was also quite remarkable.

    Foolishly,

    John Reeves

  • Report this Comment On October 24, 2012, at 1:27 PM, snjolly wrote:

    Great story, great article. And advice and reminders that are useful any day of the week, no matter where a person is in their journey. We are not a country that reflexively thinks in a long-term horizon kind of way. In fact, our society, our politics and policies, our -you name it - has grown disturbingly ever more reactive. And can certainly be applied to stock market investing in its volatile swings in recent years. Working to reverse that trend and using discipline and long-term strength and outlook for ourselves, our families, our country is tantamount to solving some of our most vexing problems. My family has given me the gift of long-term thinking. The tortoise has greater wisdom than the hare (And probably some pretty good stories.) Thank you so much for writing and sharing....

  • Report this Comment On October 24, 2012, at 1:42 PM, XMFBradP wrote:

    Great article, John.

  • Report this Comment On October 24, 2012, at 5:34 PM, Darwood11 wrote:

    Great article.

    It's inspiring to read an article in which one acknowledges their parent. So many of us write off the value of an early education learned at home. So many of us are unaware of that value. So many of us have little perspective.

    "In investing, having a long-term outlook might mean increasing your 401(k) contribution..." Yes indeed, and it might mean planning on working a few years longer, and saving more each year.

    I'm 66 and still working; my 50th year of paying taxes, because "When you stop, you drop" and because working is one of the best ways to make a difference on the planet while getting paid to do so!

  • Report this Comment On October 24, 2012, at 8:49 PM, daveandrae wrote:

    Nice :-)

  • Report this Comment On October 24, 2012, at 11:17 PM, ajcp3 wrote:

    Great article!

  • Report this Comment On October 24, 2012, at 11:41 PM, KKoleto wrote:

    John,

    Well written and well received.

  • Report this Comment On October 25, 2012, at 2:42 AM, lcdyers wrote:

    Take a bow, John. You are a better man than I thought.

  • Report this Comment On October 25, 2012, at 7:15 AM, hheiserman wrote:

    Excellent article, John. Many similarities to my beloved late Dad.

  • Report this Comment On October 25, 2012, at 12:13 PM, fool3090 wrote:

    Awesome. I had the opposite experience. My dad's a great guy in many ways but he never, ever planned and he opted to "retire" in his mid-40s, doing cash odd jobs and looking for a benefactor in the form of a second wife who worked. Seeing him live his twilight years in near penury steeled my resolve not to put myself in that situation. He inspired, but in a reverse way. And I have to thank him for showing me what not to do and what happens when you quit trying.

  • Report this Comment On October 25, 2012, at 1:58 PM, NickD wrote:

    Slow and steady isn't that slow just my experience.

  • Report this Comment On October 26, 2012, at 11:41 AM, TMFCQuader wrote:

    Thank you John for this story. Funny enough I felt compelled to send this note despite others have done so as well.

    I wish there were more dads like yours to go around. There were many things I could have learned from him, and I think many others could have learned from him. I think many parents are scared to talk about money in general (especially with the recent recession) and therefore we leave our children out of the conversation entirely. We don't want them to feel pressed on issues that are "too big for them." But, my views are like your dad's. Children need to know the truth about finances, investing and especially debt. Its too easy to accrue and not very easy to pay off.....its like a leech that keeps nagging at you for years.

    Thanks :).

  • Report this Comment On October 26, 2012, at 12:55 PM, tylee100 wrote:

    John,

    Thanks for the fine article. Like your Dad, my Dad believed us kids should all get college educations. He died before he could know that we all did graduate from college.

    I felt the same way and all four of my kids got college educations. I remember crying when my youngest graduated. I was thinking of how I had made the same promise as my Dad and now it was fulfilled like his was.

    All four of my kids now have productive jobs and are making huge contributions to society. My Dad would have been proud. He died in 1967.

  • Report this Comment On October 26, 2012, at 2:15 PM, TMFBane wrote:

    @tylee100, Thanks for sharing your very moving story. It is a great accomplishment, and I know your dad would have been extremely proud. I'm sure I'll feel the exact same way when my two kids graduate.

    @TMFCQuader -- and thanks Corrina for your kind remarks. I couldn't agree more.

    And thanks again to all of you who have commented so far. I've really enjoyed hearing everyone's thoughts!

  • Report this Comment On October 26, 2012, at 3:20 PM, Larry0505 wrote:

    John,

    Your dad and mine are similar. My parents grew up in the Depression, when having fruit cocktail was considered a treat. My dad went to night classes and earned 3 Masters degrees even though his job didn't require them. Growing up it was never a question of whether us 4 kids would go to college, only a question of where. My dad LOANED us the money for college and we all paid him back after we graduated. Thanks to the life lessons my dad taught me, I am well on my way to a comfortable retirement nest egg and I always do every task (including investing) to the best of my abilities. My dad is still with us and the next time I see him I will thank him for what he taught me in words and deeds. I am glad I can still thank my dad and I have your article to thank for that. I have to say that your article was the best one I have ever read from Motley Fool. Thanks John!

  • Report this Comment On October 26, 2012, at 3:20 PM, MFJERRY911 wrote:

    Thanks, John.

    Memories.

    When I was in the sixth grade, I was told that I was going to college (because my Dad didn't). My Dad's formal education ended at age 9 (Depression of 1920-21) to work on the farm and in the mines; he didn't want the same for his son and he made that very clear to me.

    He put in many 14-16 hour workdays; his work ethic was unsurpassed.

    I worked in the summers and during school; four years later I was the first college grad in both parent's extended families. It was a great celebration for all of us.

  • Report this Comment On October 26, 2012, at 4:47 PM, rudiheider wrote:

    I, too, am a native of Mass. and attended Northeastern Univ for 5 years for a BSChE.

    My Dad worked for the B&M railroad and I commuted from Lawrence to Boston for the entire time. I am approaching 100 years old and am very grateful for the free pass the railroad provided me.

    Without this help I would never have been able to get a college education. Rudiheider. class of 1936

  • Report this Comment On October 28, 2012, at 12:16 AM, SkepikI wrote:

    The best article I've read on MF. It brought tears to my eyes, not only because it was just like my family but because frugality is something we all have lost in the last decade or so. My Dad, born in 1925 and a combat veteran of WWII got an engineering degree from Boulder Co in 1950 on the GI bill and sent every one of his 6 children to College. He saved like a crazy man and we all got as many scholarships as we could manage. I could always tell when payday was near and the bank account was slim, because when we asked "whats for dinner" my Mom would say: Pancakes!. Clueless, we would all say YAY!

    I fear today such things would be considered "uncool" and sacrifices no citizen should be forced to endure....why it would be like not even having a cell phone.

  • Report this Comment On October 28, 2012, at 10:37 AM, Forza4st wrote:

    This is a very well written article. It transcends general investment theory and understanding and taps into the more basic concepts that underlie success - namely hard work and sacrifice. I encourage MF to repost this article along with similar anecdotal stories so that readers can understand true success in any life endeavor involves more than a technical understanding of a given subject matter and that a tremendous amount of will and determination are required to turn your dreams into a reality.

  • Report this Comment On October 29, 2012, at 2:49 AM, nanonerd wrote:

    Two thumbs up for the nice write up ... ;-)

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