Living Comfortably

Sandy and Bill Taylor on their most recent trip to Europe, in the Swiss Alps.
PHOTO BY SANDY TAYLOR

Bill and Sandy Taylor are an attractive couple in their youthful 50s; they shine in their house of 30-odd years and exude the kind of generosity that comes from a lifetime of quiet confidence and well being. While the Taylors are happy with their good fortune, they question how exceptional their position truly is. As Bill Taylor says: "We can't answer that with a simple yes or no. We feel comfortable in our financial future, but unique? I don't think so."

Bill and Sandy live in Kirkland, WA, a small city that has gotten a whole lot bigger in the past decade. Less than a 30-minute drive from Seattle if you don't get caught in rush-hour traffic, Kirkland was once referred to as "Horseland" by Seattleites who, in the 1960s and 1970s, looked with envy at the country homes and their gentrified pastures. But things have changed in Kirkland over the past three decades, the most prominent being the explosive growth in the high-technology sector of the local economy. That boom turned a number of small towns east of Seattle into the return addresses for major corporations the likes of Microsoft, Data I/O, Nintendo, and Siemens.

INVESTING WISELY

Although they don't consider themselves wealthy, Bill concedes that on any economic chart they are in a "very comfortable" position. He downplays their actual wealth, saying only that they have invested wisely, and the yearly returns on their investments are "at least equal to the yearly average of the last five years' earned income." Their financial goal is to beat inflation by at least 5% each year. Bill, being of a thrifty nature, insists that they continue to save and invest wisely, regardless of the size of their accumulated wealth.

If Working Money had a topic for a soapbox lecture, it would be to start saving early and consistently. Bill and Sandy are living testaments to this strategy. Bill's career began with Seattle-based Flohr Metal Fabricators. He started in June 1966, fresh out of Seattle University with a mechanical engineering degree. Bill gravitated into sales, marketing, and management. By October 1976, he was vice president of sales and marketing and part owner of Flohr, where he remained until his retirement in October 1997.

With a solid financial base to draw from, Bill and Sandy were able to save consistently. From 1966 through 1983, they saved 7-10% of their income, 10-12% through the rest of the 1980s, then anywhere from 15% to as much as 75% from the 1990s on.
Bill and Sandy were able to put away substantially larger amounts of their income once their house was paid off. Bill doesn't believe in debt. "As I was growing up, my family always had either lots of money or no money! I made a decision to start saving money at a very young age so that when I had a family, they would not have to face those ups and downs. I basically started my savings program when I was 12 years old." Even credit cards are paid off in full each month -- no exceptions. "No interest paid, just interest earned is a good rule," says Bill.

With no debt and a sizable income, plus the returns on their investments bearing fruit, the Taylors have been able to provide a golden nest egg for their future. Bill and Sandy could have moved to a bigger house in a more expensive neighborhood, but instead, they have chosen to stash their money in sound investments. They started with mutual funds and then, about 12 years ago, began investing in individual, value, and growth-oriented stocks.

One of Bill's local favorites, which he has invested in personally as well as through an investment club (see sidebar "Making money with investment clubs"), is Starbucks (SBUX), which he saw as a winner from day 1. Bill is also enthusiastic about local Seattle companies such as Boeing, which he says is underrated, as well as Paccar, Microsoft, and Alaska Air. His investment success speaks for itself.

Yes, Bill is good at picking stocks. He does his homework and cites the National Association of Investors Corp. (NAIC) as a valuable source of information. He points out: "You have to know when to sell as well as when to buy. You have to take the emotions out of the decision process, look at the facts, and make the gut decision to buy or sell." Although Sandy won't admit it, she's an important part of the decision-making process, forcing Bill to answer some very difficult "why" questions on his judgments in projecting the future growth and earnings of a particular company or stock.

Sandy explains they have saved money not through huge sacrifices, but a little here and a little there, by not buying name brand merchandise and by keeping and caring for what they already have. Her car is a good example. She kept the same car, a 1966 Ford LTD hardtop that they bought new, for 20 years, eventually giving it to her son when he was a teenager.

Like many of her contemporaries, Sandy stayed home and raised their two children until they were of school age. She then worked part-time as a school secretary for a local elementary school. Confessing that she is not a "career person," Sandy now picks and chooses employment where she has an interest. She babysits her grandson two days a week while planning and coordinating various family projects. Bill says that in the years they've lived in their house, they've completely remodeled it twice. Not a bad way to go, especially if you're able to build up that nest egg while you're doing it!

INTANGIBLE REWARDS

The rewards? Choices, control, and peace of mind are first and foremost. Although Bill Taylor retired in 1997 in his early 50s, he decided to go back to work, this time in a different field. A self-described "restless spirit who needs to have goals," he also took into consideration medical insurance issues. Bill didn't have a complete retirement package when he retired, and he knew that medical expenses could take huge chunks out of his and Sandy's investments.

So Bill returned to work part-time as a general manager for Sound Ocean Systems, but ended up as the CEO/general manager for RBI Industrial (RBI is owned by Sound Ocean Systems), a maintenance and repair contracting firm. When he went back to work, Bill stipulated that he receive eight to 12 weeks of vacation a year. Although his time off is unpaid, it's a good tradeoff because the job provides spending money and covers medical insurance issues.

He and Sandy use the time to travel, one of their prime rewards for their lifetime of diligent savings. Their most recent trip took them to Italy for three weeks. Sandy loves to travel, and her snapshots chronicle the places they have been and people they have seen.

These are the rewards the Taylors live for. That and the family. Sandy says they have two great kids, and the grandchildren are just starting to arrive. They have three -- a two-year-old, a 10-month-old, and the newest, only five months. The grandchildren form a large part of their lives and their plans include money for the grandchildren's education. "That first," says Bill. "Although they probably won't need our money, it will still be there." Their son has seen for himself the rewards garnered from consistent savings and is traveling down the same path.

And the rest? This was Bill and Sandy's fourth trip to Europe, their preferred travel destination after years of vacationing in Hawaii. And they have the "beach house" on Hood Canal, with a magnificent view of the water and the Olympic mountain range in the background. They are in the process of adding a game room and loft -- yet another of their many projects. Then there are the outdoor trappings: the boat, pool, golfing, waterskiing.

The Taylors' trip to Europe also took them to the canals of Venice, as well as Milan (below), to the first enclosed mall ever built.

Oh, and then there's the motor home. For the first time, Bill took three months off from work and they toured the US. They met a lot of wonderful people. They ran into one couple in particular at various tourist locations from Pancake Bay on Lake Superior all the way to Nashville. They saw beautiful scenery, especially in the Southwest, and traveled in comfort. Characteristically, Bill called it "an economical way to travel."

He also said it made him more appreciative of the Pacific Northwest with its blend of "mountains, greenery, water, and beautiful summer weather." He says the Puget Sound has it all, just like the life he and Sandy have built for themselves. Once in a while everything dovetails perfectly in time and place and temperament, and the Taylors have the wherewithal to appreciate it when it happens to them.

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MAKING MONEY WITH INVESTMENT CLUBS

Bill and Sandy Taylor helped start an investment club about five years ago, something that Bill says he always wanted to do, with a core of friends. "One of them," said Bill, "worked for the Securities and Exchange Commission (SEC), and when he retired he wanted advice on how to invest his money." He could never invest while working for the SEC, as that would have been a conflict of interest. Since then, the club has taken on additional people. It is successful, says Bill, because investment clubs need " a good group of people, and it depends on the mix," and they seem to have found that in their group. Bill is currently president and Sandy is serving as the club's secretary.

The club is governed by NAIC rules, and members follow NAIC investment guidelines in picking stocks. Each person is required to contribute $20 per month. Using the NAIC's formula that looks at such things as the 10-year history of the stock, earnings per share, and the Value Line or Standard & Poor's rating, they get a ranking from which they decide on their investments. Their goal is to get a stock that will have 15% growth per year, or double within the next five years. While this isn't a great deal of money and no one is going to get rich in the near future on the club's investments, it does, according to Bill, "reinforce my own financial decisions" and give the members an education in investing. And, by the way, the club is making money.
--S.Y.

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Are the Taylors unique? The editors of Working Money want the Rewards section to focus on other people with similar investment success. Let us know if you know others like the Taylors!

RELATED READING
Faber, Bruce [2001]. "Dressing Up Your Future," Working Money, Volume 2: March.
Waters, Rachelle [2001]. "Investment Clubs: There's Strength In Numbers," Working Money, Volume 2: March.