- Kyle Swan, CFP®
Updated: Sep 16, 2022
One night per month our home plays hosts to my wife’s book club. I’m not invited, so at about 6:50 p.m. I slink off to the basement, and my guilty pleasure during the next two hours
is watching Antiques Roadshow. Occasionally, the objects being appraised are themselves of interest, but it is usually the stories that are more compelling. When was the object made? By whom? For what purpose? Who bought it? What was going on in the cultural zeitgeist? How did it traverse time and space to come to the point where your pledge of support made it possible for me to see it on T.V.? That’s fascinating. If my humanities minor had a Spidey Sense, the Roadshow would make it tingle!
One of the great finds of the 2019 Roadshow was a Rolex watch in Fargo, ND. IF you haven’t seen it, here’s a link to the video: https://www.youtube.com/watch?v=b9Y4bmbh1KY. For those of you who don’t enjoy watching fun things, here’s a super-short summary (spoiler alert!):
In late 1974 while serving overseas, a man buys a Rolex watch for $345.97, about one month’s wages for him in those days. He decides it’s too nice to wear and puts it in a safe deposit box with all the packaging and documentation. In 2019 he brings the watch to the Roadshow where it receives an appraisal of $500,000!
That’s awesome! What an investment! What kind of return is that? So we do the math, and it turns out the average annual return over 45 years is “only” 17.55%. That’s a very good long-term return, but I wrote “only” because I’m willing to bet it’s lower than you thought it would be.
Still, over approximately the same period - January 1, 1975 through December 31, 2019 - the return on that watch did beat the S&P 500, which posted 13.5%. Wait, what? The watch whose value is going to change a guy’s life only beat the S&P 500 by about 4%? That’s right.
I want to be clear, a 4% difference over 45 years is GINORMOUS. Instead of $500,000, investing that one lump sum of $345.97 in the S&P 500 would have “only” given you just over $100,000. The guy who bought the watch hit a home run, but the market returns over the same time period were at least a ground rule double. Either way, you’re adding three zeros to the value.
Here’s the question: Are you going to buy watches – or whatever – and rent a safe deposit box? Are you going to do that repeatedly, year after year, with discipline and doggedness? Even if you do, are you buying the right stuff for it to be worth a small fortune in the future? Are you going to be lucky enough that Paul Newman wears your model of watch – or whatever - in a movie? (That happened.) Probably not.
For my part, I don’t think “swinging for the fences” is much of an investing plan. Just as with the watch, it does occasionally happen that somebody slugs a walk off home run, but big swings are also a good way to strike out. Consistently stringing together enough singles and doubles wins games, too – sometimes even championships.
Hitting singles and doubles for retirement has never been easier. Instead of buying a watch, systematically invest that one month’s wages (or more!) each and every year in your 401(k), IRA, brokerage account, or whatever you’ve got. Treat your investment like it’s a watch locked up in a safe deposit box, and let the years pass. If you already have funds in your safe deposit box, leave them there. Then imagine your turn on the Roadshow:
“Can you tell us a little bit about what you brought to the Roadshow today?”
“Well, my husband said I shouldn’t even bring it. I mean, it seems kind of silly. It’s just a piece of paper.”
“Can you tell us what you paid for it?”
“Well, if I remember correctly, I put about 15% of my earnings towards this.”
“Was that a lot of money for you?”
“I mean, I guess I could have bought a bigger T.V. or taken another vacation or two, but I didn’t really miss the money because I never had it. It just went into savings automatically. It seemed like that was the right thing to do. But now you’ve got me worried…”
“We’ll get to that in a minute. Have you ever had it appraised, or do you have some idea of it’s worth?”
“Well, it’s a statement, so I guess that number there is its worth.”
“You’re right, and you know what? This is one of the most remarkable things I have ever seen during my years with the Roadshow. It’s absolutely stunning. With that money you say you didn’t really miss, you bought one of the most valuable things I could ever hope to see. You bought a worry-free retirement. Congratulations! And thanks for coming to the Roadshow… What do you think your husband thinks now?”
Kyle Swan, CFP®