Father's Day Advice: Cash is Best of the Worst

This is my third Father’s Day without a father and it still seems strange that he’s not here. I think about Albie (“Albert” to my grandmother, “Big Al” to others) every day and especially now, as we celebrate my niece’s and nephew’s high school and college graduations; new career turns for various family members; and some amazing career highlights for me, including a once-in-a-lifetime opportunity to interview Dame Julie Andrews. But it’s when my attention turns to markets and the economy that I often hear Albie offering a no-baloney quip that would cut to the core of any issue of the day. I could imagine him describing the current investment environment like this: “Every asset class stinks, but cash is the best of the worst.” Or sarcastically referring to big investment firms’ opposition to the Department of Labor’s Fiduciary Rule: “Only these geniuses think that NOT putting the client first is a smart business proposition.” And to investors who pile into expensive, but poor performing hedge funds: “Just because they have money does not make them smart.”

You might think that as a former options trader on the floor of the American Stock Exchange (AMEX), my father would have been a big risk-taker, but as he admitted “Going broke a couple of times tends to cure one of swinging for the fences.” Dad developed a healthy respect for risk -- similar to the one he had for swimming in the ocean. When the water is calm, you feel brave and alive, but when a wave sweeps you off your feet, you are humbled.

As he matured, my father learned to be a more patient and disciplined investor and although I never liked his proclivity towards being an individual stock and bond picker, I knew that his mantras (“Nobody rings a bell at the top or the bottom”, “don’t fall in love with your positions”, “wait 24 hours before making any major purchase or sale that deviates from the plan”) kept him out of any serious trouble.

My father was a bit of a contrarian, something that used to drive me crazy. But what seemed annoying as a kid, was actually a good habit to develop: questioning the status quo, especially when articulated by so-called experts, helped me avoid being swept up in various investment manias – and freaked out about crashes – over the years. It also allowed me to consider some of Albie’s favorite challenges to conventional wisdom: Why is home ownership preferable to renting? Aren’t there cases when renting makes sense? Is attending an expensive college really worth it? Why doesn’t everyone realize that financial planners/brokers/advisers consistently fall prey to their own optimism? What if you are unable to earn 6 percent on your retirement assets? Why are people so unwilling to talk plainly about money and death?

I had lengthy conversations with my father about all of those questions and many more, including debates on sports, politics, television and movies. I was thinking about Albie after reading a report from Allianz, which found that sobering third of Americans say they regret the major choices they made in their lives, such as when/where they went to school, the profession they chose and when/where they worked. My father was the type of man who had no regrets, not even for the mistakes that he made.

On what would be the last Father’s Day we spent together, he said, “The best thing I have ever have done in my life was to raise two wonderful daughters.” He wasn’t gooey when he said it— for him, it was a statement of fact. For me, it’s the best way to remember Albie.

#224 Father's Day Financial Advice, Annuities

This Father's Day weekend, we have financial advice for dads, moms and kids. Many of you know that my father, "Big Al" or "Albie", had a big influence on me and I miss him terribly. For those who never heard the show where Dad came on as a guest, you can check out this post. I also wrote about him here.

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In this week's show, we spoke to Frank and Camille about annuities, as well as Mike about his asset allocation. Jill wanted advice or ideas about how she could contribute to her household income, perhaps through a small business and Pam asked about the about the Windfall Elimination Provision  of Social Security.

Finally, Vinnie wants to retire early…really early -- no later than 57 and as early as 52 if he can make it work...can he?

Thanks to everyone who participated this week, especially Mark, the Best Producer in the World. Here's how to contact us:

• Call 855-411-JILL and we'll schedule time to get you on the show LIVE 

• Send an email: askjill@jillonmoney.com 

• Tweet us: @jillonmoney and @MTalercio

Father's Day Financial Advice

This is my first Father’s Day without a father. My father died last November and since then, his absence is apparent at big events, like my niece's recent college graduation. But I really have missed talking to him about all of the everyday stuff that we both loved— financial markets, sports, or a rerun of a favorite “Odd Couple” episode. My father brought me into the business world at an early age. He was an options trader on the floor of the American Stock Exchange (AMEX). Early in his career, he tried to follow his father into retail, but was lured to the floor by the excitement and the hours. At the time, the U.S. exchanges were open from 10:00 am to 2:00 pm. Even when the trading day was extended, my father maintained that he had a great job, where he could both earn a good living and attend all 96 high school soccer games that I played.

In fact, one of the earliest lessons that I learned from Dad was that a job or a career that allowed you the time to do other things in your life was probably more valuable than the one that would pay the most. “Your colleagues and control over your schedule will become more important as you get older,” he advised.

I followed my father’s footsteps and became an options trader on the floor of the Commodities Exchange in New York during the heyday of physical exchanges in the late eighties. It was helpful to have Dad remind me that as a trader, one had to accept making mistakes. “It’s just part of the deal—you are going to have a bad day, month or even year. The key is to shake off the mistakes, learn from them and keep going.” That advice has served me well from the early days of trading, to the management of client money as an investment advisor, to my current stint at CBS News.

My father was a great believer in endowing his daughters with a sense of financial responsibility. When I was considering two different jobs after college, one paid a lot less than the other, but had a much bigger upside. Although the higher paying position was the safer choice, I was enticed by the greater potential. When I discussed the choice with my father, I told him that I was worried that it might be tough to pay my rent for the first six months at the lower salary. He smiled and said, “Then why not sell your car so you have the money in the bank to pay the rent for a year?”

While my parents could afford to help me pay the difference, his approach made me far more responsible for the ultimate decision that I made, which was to take the lower paying job. That kind of conversation was consistent with my father’s go-to mantra: “A big part of wealth building is to spend less and live within your means. And when the good years come along, sock away as much as you possibly can, because you never know when a bad patch might arise.”

When it came to investing, my father was a great believer in patience and discipline. “Nobody rings a bell at the top or the bottom, so develop a game plan, where you force yourself to take money off the table and rebalance on a periodic basis. Remember not to fall in love with your positions and to wait 24 hours before making any major purchase or sale that deviates from the plan.”

With all of the success that he enjoyed throughout his life, my father really didn’t care too much about money. He wanted to provide a good life for our family, but he was not an accumulator. Last Father’s Day, I remember walking into a restaurant with Dad and although he was not sick yet, he knew something was not quite right. He looked at me and said, “The best thing I have ever have done in my life was to raise two wonderful daughters.” I have thought about that beautiful sentiment a lot over the past seven months, because it helps me realize that my father always understood what was important in life.