Woody Holton: On Money, a Founding Mother Knows Best
[Woody Holton is the author of "Unruly Americans and the Origins of the Constitution" and the forthcoming "Abigail Adams, A Life." He teaches at the University of Richmond.]
Thomas Jefferson died so deep in debt that his beloved estate, Monticello, had to be sold to satisfy his creditors. James Madison also left behind mounds of financial obligations. But John Adams, the man Jefferson turned out of the White House in 1801, died rich and debt-free -- despite sharing his predecessor's careless attitude toward money. What was his secret?
His wife.
Long famous for her political partnership with her husband and her advocacy for women's rights, Abigail Adams was also something of a financial wizard. Some of the first lady's investment choices were a tad unsavory, but all of them were prudent, and many of her strategies remain useful today. Adams understood the difference between panic and reasonable caution. She largely avoided exposure to the speculative bubbles of the 1790s that did so much damage to her son-in-law and two of her sons. Had she been alive in July 2008 and owned stock in Abigail Adams National Bancorp, I suspect she would have sold it. (That financial institution named for Adams hasn't done as well as she did: It lost two-thirds of its value in the past year and is now being sold.)
This weekend, as we look back on all that this country's founding families bequeathed us, why not ask for just a little more help? We could all use it. If you were to hire Abigail Adams as your financial adviser, here's the advice that the Massachusetts matriarch would offer.
Invest with your head, not your heart. For John Adams, land was a feel-good investment, since it bolstered his sense of personal independence. He wanted to invest all of his savings in real estate. But Abigail showed her husband that his farmland returned as little as 1 percent annually, while she could earn as much as 25 percent each year speculating in depreciated government securities. (These bonds had been disbursed to Continental Army soldiers and then inveigled from them at a fraction of their face value.) John continued to buy real estate, but he shifted a large chunk of his portfolio to bonds. ...
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Thomas Jefferson died so deep in debt that his beloved estate, Monticello, had to be sold to satisfy his creditors. James Madison also left behind mounds of financial obligations. But John Adams, the man Jefferson turned out of the White House in 1801, died rich and debt-free -- despite sharing his predecessor's careless attitude toward money. What was his secret?
His wife.
Long famous for her political partnership with her husband and her advocacy for women's rights, Abigail Adams was also something of a financial wizard. Some of the first lady's investment choices were a tad unsavory, but all of them were prudent, and many of her strategies remain useful today. Adams understood the difference between panic and reasonable caution. She largely avoided exposure to the speculative bubbles of the 1790s that did so much damage to her son-in-law and two of her sons. Had she been alive in July 2008 and owned stock in Abigail Adams National Bancorp, I suspect she would have sold it. (That financial institution named for Adams hasn't done as well as she did: It lost two-thirds of its value in the past year and is now being sold.)
This weekend, as we look back on all that this country's founding families bequeathed us, why not ask for just a little more help? We could all use it. If you were to hire Abigail Adams as your financial adviser, here's the advice that the Massachusetts matriarch would offer.
Invest with your head, not your heart. For John Adams, land was a feel-good investment, since it bolstered his sense of personal independence. He wanted to invest all of his savings in real estate. But Abigail showed her husband that his farmland returned as little as 1 percent annually, while she could earn as much as 25 percent each year speculating in depreciated government securities. (These bonds had been disbursed to Continental Army soldiers and then inveigled from them at a fraction of their face value.) John continued to buy real estate, but he shifted a large chunk of his portfolio to bonds. ...