Investment Lessons from 1957

Wow. Who knew cartoons from 50 years ago were this educational?

Many thanks to Get Rich Slowly for this one.

Here’s a 1957 cartoon about the virtues of stock market investing from the New York Stock Exchange (NYSE). Fred Finchley is a family man with a good job, a lovely wife, two rambunctious children, and all the conveniences of modern life. What he doesn’t have, however, is enough money to pay for his dream vacation.

When Finchley’s boss gives him a raise of $60 a month, he faces a dilemma. Should he use the money for savings? For a couple of nights on the town with his wife every month? The NYSE suggests that Finchley put his money to work in the stock market with a “monthly investment plan”.

“Working Dollars” does a good job of explaining how dollar cost averaging works. The cartoon makes a case for small, regular investments. Investing isn’t just for tycoons — using a monthly investment plan, even the average family can begin to acquire wealth.

It may not seem like it, but this cartoon was extremely well thought out, and the personal finance advice it offers is just as applicable today. Of course, I’m not sure how excited anyone would be with a $60/month raise right now, but I’m pretty sure the point is made with $600/month or more.

The most interesting subtlety is highlighted well by Get Rich Slowly, and I couldn’t agree more. The biggest danger in personal finance is lifestyle inflation, the tendency to increase expenses with any increase in income. The danger is, of course, that income is hardly reliable, but once you get used to a certain lifestyle, it’s incredibly hard to dial down expenses. This is particularly topical for people who work in high risk/high volatility jobs, like technology and sales. Even if you have steady pay, retirement often involves a shock to the system in terms of income.

A neat find.