Let’s say you have about a million dollars in your bank account. The next day, it all disappeared.
After you stop freaking out, what would you do? Would you find out who is to blame? Or find a way to make all that money back again? How can you make it all back and still feel like you’ve successfully retired?
This situation is exactly what happened to both Dan Robertson* and Steve Schullo. They managed to lose about $1.5 million, but gained it all back in a few short years. The amazing feat was that they were both teachers (think average salary) and Dan was retired when this all happened. They’re now both happily retired, and enjoying their life in California.
Their key to gaining it all back? They were both comfortable with their financial mistakes.
How They Lost It All
Even though both Robertson and Schullo both invested, they only started to save in their late 30s.
They both got into annuities through 403b plans (the public sector equivalent of a 401k). When the returns dipped from a 12% return rate to 3%, that’s what they started moving their money into mutual fund stocks.
When they saw that their tech stocks were doing the best, they poured $200,000 into 35 of these funds. In 10 years, their money grew more than 5 times the original amount.
This is the part where it comes crashing down.
“In March 2000, we lost it all,” Robertson said. “It went all the way up to 1.5 million dollars and then we lost it all.”
Working Together and Moving Forward
When they realize they lost their fortunes, both Schullo and Robertson* recognize that they were to blame for their investment strategy, but not before they had a mourning period over what had happened.
“I mean we were sort of stunned a little bit into a kind of paralysis for a while.” Robertson said. “On the way down we had to take stock and we learned enough along the way through reading and getting careful after really not without a period of shock.“
Not only did they recognize their mistakes, they both took full responsibility for what had happened, which they credit to them being able to regain their wealth.
“We had an attitude about mistakes where we say we wouldn’t backbite or blame the other person. We can take joint responsibility and we can even smile about it because we’re a happy couple.” Schullo said. “We’re comfortable with our mistakes.”
Through many discussions and working closely together, they realized that there was no diversification in their wealth generating strategy. They found what works for them was combining a frugal lifestyle with a well diversified index portfolio to help rebuild what they lost.
What was the result of their hard work? Regaining the money they lost. “What’s remarkable about our story is that from 2000 to 2008 when I retired we had a one income household and we gained it all back.“ Schullo says. “We got back to a million [with our investments] and then by the time we sold our 2 properties, we had one and half million, right back to where we started from.”
But for them, the most important thing is having the freedom that comes from retirement. Gaining all that money back was merely a tool to help the achieve that.
*Robertson passed away from cancer in October 2016, a few months after this interview was conducted.
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