Cecille Villacorta on Early RetireMeant, You’re Meant For It!

Cecille Villacorta, a successful Asian American, was one of the Top Sales Executives at New York City's best luxury retailers. 

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Cecille’s purpose in sharing her story is to show how ordinary hard-working folks like herself can attain early retirement. This goal resonates even more in times of global financial uncertainty. She opines that investing and basic finance must be taught as early as elementary school, as it is a pervasive basic factor in almost all aspects of living. Since it is not currently taught early on in schools, parents should teach their young children investing basics and definitely cultivate this interest. The great news is Mark Victor Hansen, author of “Chicken Soup for the Soul” published a book, “The Richest Kids in America: How They Earn It, How They Spend It, How You Can Too.” Thus, a budding reality is kids are starting early; well, it’s never too early! Another author, Adam Toren, wrote “Kidpreneurs: YoungEntrepreneurs With Big Ideas.” Parents can teach their children about investing by making it a fun family activity using a stock simulator (a computer program where one can do pretend to trade using live stock market data); check out Investopedia. Begin with stocks that would be of interest to them like Disney, video-makers Nintendo, basic consumer giants, and dividend aristocrats like Procter & Gamble (P&G), Johnson & Johnson (JNJ), etc. The key is starting early, as Cecille, a late-starter, learned from her own experience; however, self-education, discipline, and intense focus proved advantageous.

Cecille Villacorta started investing in stocks in the early 1980s. Initially, she did not pay much attention to it. She paid cash for her apartment in 1994 in New York City’s exclusive enclaves during the seismic New York real-estate market collapse by taking out a cash margin loan on her stock brokerage account. Luckily (Cecille attributed it to Divine intervention!), about a few weeks later, the major stock on her account surged, split two-for-one, and covered the margin loan. In her opinion, Cecille does not recommend being on margin, especially in the current volatile global market. Next, she learned that having her neighborhood bank invest some of her money was not productive after reading the small print, which showed big commissions and fees. She rapidly bid adieu to her investor account at her local bank and began her self-education in investing, as she dreamed of early retirement.

It is not one’s salary or earned income, but the amount of money from one’s salary/income, which one invests, is how one builds a nest egg. Quoting Albert Einstein, “The most powerful force in the universe is compound interest,” and continued on to call it “the greatest mathematical discovery of all time.” Add, “Time is your best friend” to that, and one is off to a head start in sound investing. A long-time investor-friend said, “If you stayed in the market during every market crash, you would have reaped the largest gains ever…”

Keep in mind, about saving and investing: It’s not only how diligent you work, but how diligent you let your money work for you. When Cecille began seriously investing, she was in her late twenties. She quickly assessed she had to be an “aggressive” investor to make up for some lost time. A major prerequisite for being an investor is to have a “stomach” for it: A “stomach” made of steel. One has to be prepped for the vomit-inducing-lows and crashes of the stock market. Especially for late starters like her, if one does not have the “stomach” to be in the stock market, it may be wise to not be in it. One needs the stamina for the roller-coaster-like ride of soaring highs and the gut-busting-lows. There are those who, after the dizzying lows, just get off the roller-coaster ride altogether; then there are those who enjoy the soaring highs and the hair-raising-jaw-dropping-screaming-lows. Peter Lynch (In its 1977 inception, he managed the then little known Magellan Fund, grew the fund from $18 million to a whopping $14 billion during his 13-year term) said: “All the math you need in the stock market you get in fourth grade... Everyone has the brainpower to make money in stocks. Not everyone has the stomach.”

In Cecille’s case, she had unexpected and severely costly rainy days, which almost wiped out her investment portfolio. She’s recovered since. So she surely knows about starting over, from tough personal experiences and having an investor’s stomach that’s been put through a fierce gut-tearing test.

Cecille read up on investing (she is currently preparing her book list) and voraciously read all the books by Peter Lynch, Charles Schwab, and Jim Rogers (Mr. Rogers started investing in stocks with $600 in 1968, he co-founded the acclaimed Quantum Fund that gained 4,200% while the S&P 500 gained 47%, over a ten-year period, he retired at 37). She highlights these books because they are the most readable and captivating, especially for beginners. They can each be read in about one sitting. Most of these books espouse that if one cannot faithfully devote at least 30 minutes a day to one’s investments, one should not be an investor. As with everything, Cecille opines, “do your own homework” and“one cannot and should not delegate one’s own investing.” Mr. Lynch said, “The person that turns over the most rocks wins the game.” Bring to mind the “victims” of all the fund manager fiascoes. That Cartier or Patek Philippe watch you’ve always dreamed of owning will certainly look better on your wrist than on your “broker’s” or “hedge fund manager’s,” enough said!

One of the first books that Cecille read was Charles Schwab’s (the founder of the eponymous discount-brokerage firm) “Invested: Changing Forever the Way Americans Invest.” Peter Lynch, the legendary Magellan Fund manager, wrote to  “Know about” what you're investing in. If you are using a product/service regularly, you probably should own its stock. Read up on the company, its management culture, know about its officers, their backgrounds to have an idea about their business models, and experience its level of personalized customer service (all it takes is an 800-number phone call, an e-mail, or even better, a letter). This singularly speaks volumes about a company’s main asset: Its employees. Mr. Lynch narrates in one of his books how he visited the plants, service locations and spoke to everyone as much as he could from the bottom up before he invested in a company. He adamantly encourages learning how to read a financial statement/balance sheet and annual report. He gives a step-by-step guide on learning how to read them in one of his books, “Learn to Earn.” You’ll want to know the company’s solvency before putting any of your hard-earned money in it. Cecille also gives credit to her habitual use of Google.

Since one Cecille’s personal goals were early retirement; she did a lot of research on how, being a late starter in investing, one could retire early before the average 65 age of retirement. As mentioned earlier, she had to be an“aggressive” investor, investing in historically high-dividend yielding stocks with strong dividend-payout histories. When she started seriously investing, one of her early parameters was owning stocks with a dividend yield of at least 7% and higher.

In 2004, she was enlightened by Jim Rogers’ book “Hot Commodities,” one of its premises is commodities are not manufactured products (some are affected by unpredictable weather and changes in nature, i.e., agricultural) and that one indisputable fact is, their earthly sources are limited, rapidly diminishing and irreplaceable. True enough, since Cecille read Mr. Rogers’ book, commodities despite its pullbacks, had bull market surges within bear markets over the past decades. Cecille resorted to amply detailed research to pick which commodities. For starters, she recalls Googling the question, “What material is the most used in electronics, computers, mobile phones ...” the answer, copper. Why? Copper, unlike any other material, is the only material that is a conductor of electricity. Her other Google searches were “world’s largest suppliers of copper,” their “dividend yields,” “historical dividend payouts,” and “cash reserves”... These are some significant criteria for an aggressive investor whose goal is early retirement. Some of her other online searches were, “world’s corporation with the highest cash reserves,” “corporation with largest uranium reserves”... Mr. Rogers’ latest book, “Street Smarts: Adventures on theRoad and in the Markets,” is for seasoned investors and a must-read.

If you are employed, it is beneficial, aside from trying to max on your 401K and IRA contributions, to set aside an amount to purchase high-dividend yielding stocks by signing up through your self-directed brokerage account or with the companies directly, for DRIPs (Dividend Re-Investment Plans) and/or SIPs, (Shareholder Investment Programs) most of them require minimums of anywhere from $25 to $250 (they can be set up for IRAs); and importantly reinvest the dividends. Remember, the power of compound interest.

For conservative investors, it would be blue-chip dividend-yielding stocks with long consistent historical payouts. Cecille believes no matter what your personal situation may be, it’s never too late to do your own investment homework suitable to your unique personal situation; start investing in stocks, and contribute to your 401K and/or IRA. The operative word here is to start, and foremost is to be patient when investing. While you’re doing your investment homework, an option is to put your funds in a total-stock-market-index-fund or a Dividend Aristocrats Index with a low-expense ratio and check the fund’s track record.

Learn to sift through information yourself. If an “analyst” recommends a stock, there might be a chance that the “analyst’s” firm wants to dump that stock. Again, do your homework. Facts check the “analyst’s” background, the “analyst’s” firm, if they own the stock they are recommending, and how much of it they own. Since there’s a lot of information out there, make it a habit to double-check and verify the “facts.” Over time, one learns which sources are reliable, and the aforementioned books list many of them.

Earnestly learn to make your own investment decisions based on your own research that applies to your own situation and resists blindly following so-called “experts.”

Cecille also found out that Israel was on the verge of a raging bull market primarily because then-Finance Minister Benjamin Netanyahu’s administration (2003-2005 ) essentially deregularized Histadrut (the trade union) in Israel. Be watchful of economies in the global market and countries that are ripe with investment opportunities before they take off, i.e. Myanmar. As Jim Cramer, energetic TV host and the author, are wont to say:
“There’s always a bull market somewhere!”