Most of the benefits of investing are obvious. Many would say they amount to zero – or rather all the zeros you hope to see at the end of your bank balance!
More thoughtful souls ask what successful investing could translate into, whether it be the sports cars and fancy holidays you imagine as a young investor to the early retirement, freedom, or even health care opportunities you’ll probably find are as important when you’ve actually made it.
What about living for longer? That’s not a benefit of investing you hear about often, but perhaps we should, since most of the great investors lived long lives.
Why should this be, and is it something we can add to the reasons for investing?
Long lived investors: The evidence
I started thinking about investor longevity while pondering who’ll take over from septuagenarian Warren Buffett at Berkshire Hathaway.
But Buffett is just one of many great investors who’ve lived long lives.
Here’s a few of the long-lived investing heroes to inspire you (click on their names for Wikipedia entries to learn more about each).
Irving Kahn: Age 103
The chairman of Kahn Brothers Group said in 2003 that he still enjoyed looking for cheap stocks, and often worked evenings and weekends. His son Thomas, said: “My father continues to research ideas and talk to companies. Once of the nice things about this business is that there’s no mandatory retirement age, and you allegedly get wiser as you get older.”
Phil Fisher: Died aged 96
The growth investor and author of the still-popular Common Stocks and Uncommon Profits tried not to sell his investments, which certainly helps when you buy the likes of Motorola in 1955 and hold until 2004. At a sprightly 58, his billionaire son and money manager Kenneth Fisher must wake with a smile.
John Templeton: Died at 95
Templeton became a billionaire by pioneering overseas investment funds in the U.S. He is also famous for buying bombed out shares at the start of World War 2 when he was 27, seeing huge returns. He died in 2008, devoting much of his final years to philanthropy.
Walter Schloss: 93
Another pupil of Ben Graham, Schloss beat the S&P by 5% a year for five decades. He only stopped running other people’s money in 2003, aged 87.
Charlie Munger: Age 85
Born in 1924, Buffett’s partner Munger is even older than the Sage of Omaha, and is an established investment guru in his own right. He still co-chairs Berkshire Hathaway’s meetings with Buffett, despite his years.
Benjamin Graham: Died at 82
The mentor of Warren Buffet, father of value investing and renaissance (as well as ladies’) man, Ben Graham didn’t become as rich as the others on this list, but by all accounts that was only because he treated investing as an intellectual game rather than a means to wealth. He died in 1976.
Jim Slater: Age 80
The UK investor best known for The Zulu Principle, Slater is a trained accountant who made several fortunes. Being born in 1929 didn’t stop him turning up for The Motley Fool a few weeks ago to take part in a podcast on the 2007-2009 bear market.
Warren Buffett: Age 79
Despite being born in the Depression in the 1930s, Buffett has lived a long, productive life, most of it at the helm of Berkshire Hathaway. As the second richest man in the world, his investing prowess needs no further explanation.
George Soros: Age 78
Initially a near penniless philosopher and immigrant, Soros started running hedge funds in the late 1960s. Today, his $11 billion fortune makes him the world’s 29th richest man. Giving the Bank of England a heart attack in the early 1990s by attacking the British pound seems to have kept his own ticking over nicely.
Peter Lynch: Age 65
A keen golfer who would only just recently have become eligible to claim his free bus pass if he lived here in the UK, it will be interesting to see if the legendary Fidelity fund manager can surpass Buffett’s longevity record. (Unless you’re Peter Lynch, in which it will be more than interesting!)
Why might investing mean you live longer?
Investing and the markets is a personal passion of mine, but is there any logical reason why I might hope it could also have some life-enhancing properties that benefited these investors?
Here’s a few good reasons I can think of:
People who are happier and lead productive lives have been shown to live healthier, longer lives. There’s no doubt all these investors loved investing.
Same again. Lots of old people in Japan now do brain training exercises to ward of Alzhiemer’s disease and other degeneration of the brain. What could be more testing than trying the impossible – beating the market through stock picking?
The flipside of distress, eustress is a form of positive stress, associated with achieving gains in life. The stock market rollercoaster can be trying, but it’s not as dangerous as the stresses of, say, bull-fighting or motor-biking. Perhaps getting through bear markets like Ben Graham or Jim Slater or investing in the volatile small caps favored by the latter helped fortify them for the long-term – physically as well as financially?
Intelligence and upbringing
Most of the legendary investors enjoy comfortable childhoods. Success in investing could be a consequence of having a healthy body and mind, rather than a cause of it.
Keeping an old body ticking over doesn’t come cheap. Perhaps great investors can simply afford good maintenance? Perhaps lots of rich men die old, but I’ve never noticed since I’m not particularly interested in wealthy people.
Old rich investors could be a red herring
The bad news? Rich old investors could be just another manifestation of the magic of compound interest.
Let’s say you and your best friend both begin investing at 25, adding £5,000 to your funds every year.
You’re both excellent investors, beating the market to deliver Buffett-rivaling 20% returns year-on-year for three decades.
At age 55, you both have a small fortune of around £7 million.
At this point, your best friend decides it’s time he spent his winnings. He enjoys a couple of years of wine, women and song – often all at once – before meeting his end sky-diving in the Andes.
You, on the other hand, keep investing for another 30 years at the same rate of return. Aged 85, you’ve got a £1.6 billion portfolio and are mentioned in the same breath as various investment greats.
You were both excellent investors, but nobody remembers your friend and his ‘mere’ £7 million. It took another three decades for compound interest to bring you onto the world’s radar screen.
It could be that a long life is required to generate truly incredible investment returns, rather than the latter causing the former.
Investing won’t kill you
I suspect it’s true compound interest has played a big role in turning the oldest investors into legends.
But it’s also true that the likes of Buffett, Graham, Templeton and Fisher were all noted investors in their 40s and 50s.
On balance, I’d prefer to believe that the discipline of investing – particularly the mental aspects, and the focus on the long-term – can help us to live longer, healthier lives.
Just don’t forget to get away from your portfolio to enjoy it once in a while! 🙂