Friday, May 23, 2008

A Lendendary Woman

Go to Yahoo or Google and search for "Anne Scheiber"
She is a legendary woman who was 101 years old when she died in Jan 1995.
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Whats is so legendary about her?
* Anne was an auditor in IRS till 1943 when she reached retirement age. She decided to stop work and live on a $3,150 annual government pension. She only had a savings of $5,000 when she retired.
* For the next 52 years, Anne lived quietly and simply in her small, rent-controlled apartment in New York City. She clipped coupons, shopped for discounts at the local stores, ate home a lot, living on minimum government pension.
* When she passed on in 1995, her will was opened and the larger world found out that the little woman in the tiny apartment had left a $22 million dollar estate to Yeshiva University. And that her stock investments were earning around $1 million per annum, most of which she didn't spend.

2007 recipients of the Anne Scheiber Scholarship

The magic of compounding
Anne was burned by various stock brokers, including her brother during the 1930s, and had resolved to never depend on them again. She did her own research, chose her own stocks, and by the time she passed away 52 years later, her stock choices had grown at the rate of around 17.5% per year. And the paltry five grand had mushroomed to $22,000,000 and counting. (We call this the magic of compounding)

Her investment Strategies
1) Price of shares doesn't matters
She favored firms with growing earnings and tend to ignore a stock's price to earnings ratio. She reasoned that stocks are overpriced sometimes and underpriced others but if the company's income rises year after year the buy price doesn't matter.
2) Savings Bit by bit (Dollar Cost Averaging)
She lived a very frugal lifestyle and continue to invest with her meagre pension monies.
3) Buy and hold (No market timing)
She never sold a stock in which she believed. Neither in the bear market of the '70s nor during the crash of '87 she was worried. Instead she thought the general market had gotten overpriced, and she was convinced her stocks would come back.
4) Demanding Answers (Proper research and know what she buy)
She went almost every annual shareholder's meeting and demand answers from the CEO as if she is still working as an auditor.
5) Reducing her dividend tax (Minimising Taxes)
In order to cut taxes she reinvested her dividends in tax exempt bonds. When she died, she had 60% in stocks, 30% in bonds and 10% in cash.
6) Power of Compounding (Investment with Time, not timing)
Think this is the most important strategy. She allowed her money to compound for 52 years.

Well. Can we achieve something legendary like her? Its actually quite possible but we have to be disciplined and start early...

3 comments:

Anonymous said...

Yes, she is very lucky. I am now still holding onto some share cerificates ( yes! the original certificates ) for many years. Today, these share cerificates are not even worth the paper they are printed on. Reason: these companies have failed and closed. So choose the companies you want to invest in with great care.

nofearSingapore said...

Hi
Inspiring story.
I really should evaluate my portfolio so that only growing blue chips remain.
There is little place for speculative 2nd and 3rd liners!

Rebekah said...

Anne Scheiber is a Jewish woman. She lived a Torah(1st 5 books of d bible written by Moses) Lifestyle.

Yeshiva students study d 39 books of d old testament. The Jews called Tanach.

You can view our Israel Tour trip photos @ http://www.dropshots.com/rebekahgiam

Keep in touch. Will miss you. Shabbat Shalom!