The Smartest Thing This $17 Billion-Woman Ever Said

Forbes Magazine recently released its billionaires list. The list of names is typical: Bill Gates, Warren Buffett, and... Abigail Johnson? Who is this person and how did she get so rich?

Abigail Johnson has an estimated net worth of $17.3 billion, which makes her the 50th richest person on the planet, and the 25th richest individual in the United States.

She narrowly trails Michael Dell, who checks in at $17.5 billion, and is even ahead of current Microsoft cofounder Paul Allen, who has a net worth of $15.9 billion. While Abby's name may not carry the same weight as some of the others, her words certainly should. 

Who she is
Abigail Johnson, known as Abby, is the granddaughter of Edward Johnson II, who founded Fidelity Investments, the investment management and mutual fund company which currently has more than $4.6 trillion in assets under administration. 

While it would be easy to chalk up her success to her family lineage, Abby received her MBA from Harvard and has been diligently pursuing a career in financial services. The 52 year old is currently is the president of Fidelity Financial Services, which is the consolidation of all of firm's core businesses.

"During her 24-year career at Fidelity, Abby has gained a breadth of experience overseeing many of the divisions that comprise Financial Services," said her father, the CEO of Fidelity Investments, Edward Johnson III, when the announcement of her appointment to her position was made in 2012. "She has demonstrated an ability to drive change and innovation in business practices on behalf of our customers. She is well suited for this important position." 

When the announcement was made, Businessweek said she was now "the most powerful woman in finance." 

What we can learn from her
Although Abby is notoriously private, the Washington Post noted in November, "fifteen months after being named president, in charge of all of Fidelity's key business units, she has said nothing publicly about her goals for the company," thankfully Abby was happy to reveal the best investment advice she had ever received. 

In 2010, as the U.S. economy was still dragging after the recession when asked by CNN Money to share the best money tip she'd be given she said: 

Be cautious with leverage and keep a long-term perspective. When stock and real estate prices are going up, purchasing assets with borrowed money can be very enticing. But when the bull market turns, as it always does, the destructive power of too much debt can quickly overwhelm a company's balance sheet or an individual's personal finances.

Leverage is the measure of a company or person's debt to their net worth or equity, and too much debt has been the downfall of both many individuals and companies through the years. It is one of the reasons Lehman Brothers failed so spectacularly, as it relied too heavily on short-term debt to fund its operations. Countless Americans were drawn to purchasing larger homes than they could afford as they believed the values would continue to rise past 2008.

Now more than 5 years removed from the collapse of Lehman, it's easy to forget the destructive power too much debt can have, as Johnson's words serve as a sobering reminder to always "be cautious" when considering both personal debts and investments in companies with high amounts of debts.

It shouldn't serve as a total deterrent to avoid any debt whatsoever, as it can be beneficial, but a reminder to ensure the right amount of diligence is taken to ensure the debts don't pose an outsized burden.

While it's easy to think markets will continue on their rise indefinitely, it's always important to remember too much debt can be truly devastating, and every financial decision surrounding debt should be approached with both diligence and care.

1 more billionaire to learn from
While finding investment advice from Johnson and other billionaires is difficult, there is one who has been happy to share. Warren Buffett has made billions through his investing and he wants you to be able to invest like him. Through the years, Buffett has offered up investing tips to shareholders of Berkshire Hathaway. Now you can tap into the best of Warren Buffett's wisdom in a new special report from The Motley Fool. Click here now for a free copy of this invaluable report.

Editor's Note: a previous version of this article cited Paul Allen as Microsoft's CEO. The Fool regrets this error.


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  • Report this Comment On March 10, 2014, at 1:24 AM, FactCheckMan wrote:

    Dear Mr. Morris:

    You authoritatively state: "...current Microsoft CEO Paul Allen...".

    Do you live under a rock, or do you take all of TMF readers to be utter Morons? If you cannot be trusted to know the current CEO of MSFT, they what else can be trusted that you spout?

    The current CEO of MSFT is Satya Nadella (http://www.microsoft.com/en-us/news/exec/nadella/). Prior to that, Steve Ballmer was the CEO for a long time.

    Back to the drawing board for you....

  • Report this Comment On March 10, 2014, at 1:39 AM, FactCheckMan wrote:

    BTW, we've known about Ms. Abigail Johnson for a while now, and we respect her and her father a lot.

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