2827: 4 Lessons From the Richest Woman In Wall Street History by Nick Maggiulli of Of Dollars and Data

[00:00:00] This is Optimal Finance Daily. Four lessons from the richest woman in Wall Street history by Nick Maggiulli of Of Dollars and Data.com. And I'm your host and personal finance enthusiast, Diana Merriam. Welcome back to Optimal Finance Daily, where I share some of the best personal finance

[00:00:46] blogs online with some of my commentary at the end. So with that, let's get right to it as we optimize your life. richest woman in Wall Street history by Nick Maggiulli of Of Dollars and Data.com.

[00:01:06] I know you've heard the names John D. Rockefeller, Andrew Carnegie, and JPMorgan, but what about Hedy Greene? Hedy stood as the lone woman among the titans of the gilded age, and upon her death in 1916, she was worth $100 million.

[00:01:27] This sum was roughly equivalent to 1 500th of the US GNP at the time, placing her 36th on the list of the 100 wealthiest Americans ever and the only woman in the top 100. For comparison, John D. Rockefeller, the richest person in US history, had a net worth of $1.4

[00:01:50] billion in 1937, or 1 65th of the US GNP at the time. Though some of Hedy's fortune was inherited from a whaling enterprise run by her father, she was able to grow it through exceptional discipline in her financial life.

[00:02:08] She routinely lent money to banks and even bailed out New York City in 1898, and again in 1901 with loans of over $1 million. Hedy was frequently consulted for her business acumen, especially during times of financial panic.

[00:02:27] From her beginnings as the daughter of a whaling magnate to her demise as the richest woman in Wall Street history, here are four lessons we can all learn from Hedy Greene. Number one, frugality can be a blessing and a curse.

[00:02:44] Hedy's deepest personal finance lesson is also what made her famous, her extreme frugality. A woman who was worth tens of millions of dollars embraced none of the luxurious lifestyle that her counterparts became famous for during the Gilded Age.

[00:03:01] In fact, Hedy's lifestyle was about as far from opulent as I can imagine. When her clothes got soiled, Hedy only paid for the dirty spots to be cleaned. When she got sick, Hedy would put on a disguise and head to the free clinic.

[00:03:18] When it snowed, Hedy walked instead of hiring a private car. There's even an incredible story about how Hedy once spent hours looking for a two-cent stamp she had misplaced after a long carriage ride.

[00:03:32] This extreme frugality was a financial blessing for Hedy because it allowed her to save money throughout her entire life. This is a tip I have preached over and over on Of Dollars and Data, because if you can't save money, your investment returns won't matter.

[00:03:48] However, Hedy's frugality did have consequences. She was given the nickname The Witch of Wall Street, and the Guinness Book of World Records referred to her as the world's greatest miser. This may be one of the reasons why she's less well-known than her Gilded Age peers.

[00:04:08] More importantly though, Hedy's frugality made her value money over time at great cost. There's a rumor that rather than seek immediate medical attention for her son's injured leg, she initially took him to a free clinic to save money.

[00:04:25] In the end, her son's leg had to be amputated for something that might have been avoidable. Frugality can be a curse, but it doesn't have to be. Number two, invest conservatively to prevent panic. Along with her frugality, Hedy was known for investing in conservative investments, that

[00:04:46] is, mostly bonds and real estate. She purchased US bonds from 1865 to 1867, a time when the Civil War was still fresh in the public's mind, and routinely provided loans to borrowers and kept the underlying land if they defaulted.

[00:05:05] By being conservative with her money, Hedy was able to weather panics and keep buying when everyone else was selling, especially at distressed prices. This is why I recommend a minimum allocation of 15% to bonds and at least six months of

[00:05:22] emergency savings for even the youngest and most risk-seeking investors. Risk theory teaches us that losses feel twice as bad as gains feel good, so the extra return you get for owning more risky assets won't be worth the increased probability of panicking and selling at a loss.

[00:05:44] However, please consult a financial advisor to find what's right for you. Number three, live life on your own terms. Though the first female-owned brokerage house was opened by Victoria Woodhull in 1870, women were not a part of the culture of Wall Street during Hedy's time in the late 1800s.

[00:06:05] However, this never stopped Hedy from living life on her own terms and holding her own in a world predominantly controlled by men. Hedy was once quoted saying, quote, I always try to deal justly with everyone, but if anyone wants to fight me, I'll give

[00:06:24] him all the fight he wants, end quote. This helps explain why Hedy may not have been well-liked, but it also explains how she didn't let anyone push her around or influence her financial decisions. Hedy's example provides an incredible lesson for your finances. Invest on your own terms.

[00:06:46] Our finances are unique, so there's no reason why they should be like anyone else's. Remembering this truism will prevent you from chasing the next hot stock or asset class and making financial mistakes. You should have a personalized financial plan and you should stick to it.

[00:07:06] And number four, donate quietly. Despite her reputation as a cheapskate, Hedy could be generous with her money at times, but not in a public way. She was known for lending money below market rates to help those in need and gave money to families on occasion.

[00:07:25] Could she have been more generous? Of course. However, her generosity was private and 100% real. She never wanted recognition for her good deeds, which is a lesson for us all. There are times when large donations can inspire others to donate as well.

[00:07:43] However, don't do something just to virtue signal. Donate quietly. It all goes back in the box. In the end, Hedy Green will go down as one of the best wealth managers in history. She knew how to invest and played her financial cards right throughout her life.

[00:08:02] Unfortunately, when Sylvia Green, Hedy's daughter, died on February 4th, 1951, roughly 35 years after Hedy, her estate was scattered amongst over 150 different individuals and institutions because there were no heirs to the family fortune. In a cruel sense of irony, the money Hedy had spent her entire life building and protecting

[00:08:26] ended up in the hands of institutions that Hedy would have despised. In this unexpected outcome, there's an important lesson that even Hedy never learned. No matter how much money you acquire in life, you can't take it with you.

[00:08:41] No matter how hard you work, no matter how much you save, one day it will all end. As one of my favorite speeches about getting rich concludes, it all goes back in the box.

[00:08:58] You just listened to the post titled, 4 Lessons from the Richest Woman in Wall Street History by Nick Majulie of ofdollarsanddata.com. And I'll be right back with my commentary. Hedy's story reminds me that just because you have money doesn't mean you enjoy the emotional benefits of having money.

[00:09:18] It sounds to me that Hedy had a real scarcity mindset when it came to her money. It reminds me of some people in the fire community who are millionaires but feel nothing but fear. It seems like complete madness to me.

[00:09:34] If you've accumulated enough money to satisfy all of your wants and needs, why wouldn't you look at your accounts and net worth and feel a sense of peace? We all think that we'll feel better once we have more money.

[00:09:47] We believe if we hoard enough money and hit a target net worth number, it'll make us feel safe. I believe we're asking our money to do way more emotional labor than it's capable of. Being able to fully enjoy financial freedom requires that we move from a scarcity mindset

[00:10:05] to an abundance mindset. And this is deep inner work. If you'd like to hear more from me on this topic, I did a 20-minute speech on it at a Camp Fi event in California.

[00:10:17] The video is available on the Camp Fi YouTube channel and it's called Unlocking the Abundance Mindset. But that should do it for today. Have a happy rest of your day and I'll see you for the Monday show tomorrow where your optimal life awaits.