I started investing in 1986 as an 18-year-old fresher at university. I met my wife there and we’ve been together for 36 years. I’ve written almost 10m words (including one book) about financial matters, while my wife finds this subject boring. Guess who’s the better investor? Indeed, Mrs D is so successful that I refer to her as my own personal Warren Buffett!
Warren Buffett is my hero
Nicknamed the Oracle of Omaha, Buffett is a 92-year-old investing genius. After giving away $50bn to charity, he still has a $111.5bn fortune. ‘Uncle Warren’ is widely regarded as the greatest investor of modern times. Yet even he has lost big-time on the occasional bad bet.
Incredibly, my wife has never lost money from any investment. Without fail, every single trade she’s made has delivered profits. Hence, here are five lessons from the greatest investor I know.
1. Start early
Immediately after graduating and starting work in 1989, my wife began buying shares. Almost 55 today, she’s had 34 years in the market and these decades of patient investing have delivered outstanding returns.
2. Don’t meddle
Mrs D understands that fiddling with one’s investments can be counter-productive. Chopping and changing one’s portfolio often produces negative results, due to transaction charges, taxes and so on. For her, it makes sense to spread her risk by buying into solid companies for the long term and being very patient.
3. Pump up the pension
Fortunately, my wife was a member of a generous defined-benefit/final-salary company pension scheme for most of her working life. This will pay her a guaranteed income until she dies.
But this wasn’t enough for Mrs D, who prefers to take control of her destiny. Therefore, she paid regular AVCs (Additional Voluntary Contributions) throughout her career as a fixed percentage of her income (6%+, I believe).
When she could, she would also invest individual cash awards and yearly bonuses into her pension to save tax. Today, my wife has a pension pot worth well over £1m, built by decades of hard saving.
4. Invest in discounted shares and ‘free’ stocks
In 1989, Mrs D joined a leading FTSE 100 company valued at £4bn (and around £88bn today). When her employer made her redundant 31.5 years later, she owned a huge number of its shares. As a bonus, her employer paid all taxes due when liquidating this shareholding.
During her career, my wife made out like a bandit by buying cheap, discounted and free shares from her employer. These included Sharesave/SAYE (a five-year savings scheme), a ‘buy one, get one free’ plan, free shares, plus regular grants of options. She was delighted at just how much she made from these company-sponsored schemes.
5. Buy a house and upgrade
Lastly, my wife would recommend buying a home using an affordable, fixed-rate mortgage. She could pay off her current home loan today, yet choses not to, because it charges interest of just 1.24% a year. Also, she suggests upgrading homes more often than we did (very rarely).
One bonus tip: my personal Warren Buffett recommends spreading one’s risk widely. Never ‘bet the farm’ on any single company or stock. In the long term, being cautious and sensible has paid off handsomely for her!
