Investment Ideas We Can Learn From the Silent Generation
August 30, 2010When you go to the grocery store today to pick up a gallon of milk you have the opportunity to choose between whole milk, 2%, 1% or fat free and don’t forget that you can choose organic milk or even soy or rice milk. We have multiple choices in just about everything – bread, cereal, jam, coffee, tea, etc. It is an endless journey of choices!
Think back to our grandparents or parents and the choices they had. You went to the store to buy milk and you picked up your gallon and walked home. In terms of investing, there weren’t as many choices either. Investments consisted of Treasury bills, bank accounts, stock and bonds – pretty simple. In some ways, those days were easier without so many choices and some of the choices they did have were pretty good!
Let’s take a look at some of the investment choices the Silent Generation had that made them successful. This generation bought individual shares of stock in solid growing companies and held them in a brokerage account. The advantages here are long term growth, favorable tax treatment (long term capital gains), and the ability to spend or reinvest the dividends.
Many from this generation kept the principal and spend only the dividends to supplement their income. They also bought income producing assets like utility stocks and bonds with the goal of setting up income streams for their retirement. They participated in the growth of companies and reaped the rewards of the income stream these investments produced.
While these days, we have 401(k)s and IRAs – both traditional and Roth, we should remember to look back at long term investment success from the old days when things were simpler and maybe just as effective. If you are lucky enough to have grandparents who are still living, ask them about how they used to do things – since they are called the Silent Generation, with some of them, you might need to prompt them a bit to get it out of them!