May 7^th

Today I take a different direction: There have been several interesting letters to the editor of the Record-Eagle, our local daily newspaper. The back-and-forth exchange began with a letter pointing out that “Someone lucky enough to have a million dollars invested would by now be $89,000 wealthier without having to lift a finger.” And then the writer contrasted this with the $16,300 that someone gets working at minimum wage for 40 hours a week.

In this polarized political atmosphere there was swift blowback. No one disagreed that the owner of a million investable dollars could have made over 85 thousand dollars in the market last year without lifting a finger. That is an undebatable fact. The outrage was over the writer saying “the person lucky enough to have a million dollars.” Two respondents claimed that luck had nothing to do with it; for one writer the million came from “hard work and long hours”—“paying their taxes”—“saving and investing wisely.” Then this gentleman accused the writer of “playing the class warfare card.” This writer claims the writer says “apparently greedy “wealthy” individuals…” but nowhere in the original letter does the word greedy appear. That word is perhaps inserted to validate the class warfare charge. One might also note that every time this writer uses the word wealthy he puts it in quotes. Maybe he is in a position to feel that having a million investable dollars does not make one wealthy, just “wealthy.”

So what do we know about this man who claims that it isn’t luck at all:  his name is irrelevant; his background is not He is a retired vice president of a major American corporation, retired after over twenty years of service. I’m sure he worked hard, paid his taxes and invested wisely. On the other hand, he was lucky enough to be born in America, to be bright enough to get a college degree in business and not to work for Hewlett Packard where he might, in spite of all his fine attributes, been one of the 18 thousand people laid off by Carly Fiorina. I think that luck played a considerable part in his probably comfortable retirement.

The other respondent’s letter was in today’s paper; she has a problem with reading comprehension. She quotes the original letter that claims that by investing a million dollars you could become $89,000richer without lifting a finger; so far so good. Then she adds, “How does an investor reach a million dollars without lifting a finger?” Whoops there! The original writer said no such thing; she said that once you have a million dollars you can get another $89,000 without lifting a finger; that’s quite different. Then this lady claims that if you invested just $25 a month beginning at age 25 you would have a million dollars at retirement. $25 a month for forty years will produce just $12,500. If you invested all of that in the market  forty years ago when the Dow was at about $800 it would now, with the Dow at about $18,000, have multiplied your stash by enough to give you less than a third of your million dollar target. (If you want a million dollars after forty years you must invest $150 a month, six times as much as this woman suggests, and you must get ten percent compound interest; calling Bernie Madoff!) Oh well, I’ll bet the lady is not a properly certified financial advisor and if you rely on letters to the editor for financial advice you’ll deserve what you get.

I’ll have a letter to the R-E soon in support of the original writer and I’m sure I’ll get some blowback. Stay tuned.