Today I wanted to share an interview that I had with Laurie Itkin, who also goes by the name “The Options Lady.” I love Laurie's story because she works in financial services, and was a millionaire before she turned 40.
She started investing when she was 24 years old, and kept it simple though her life: lived below her means, worked to max out her 401(k) and IRA contributions each year, and believe it or not, never got involved in real estate.
It is her common-sense strategies and more mainstream outlooks that made me want to talk with her. She even has a book coming out soon called Every Woman Should Know Her Options, which you can find out more on her website, The Options Lady.
Remember, every other week we bring together a young millionaire investor to share their story, their successes, and their failure, to provide inspiration and learn from their accomplishments.
Let's find out more about Laurie . . . .
Getting to Know The Options Lady
Tell me about yourself and your company?
Laurie: I founded The Options Lady (www.theoptionslady.com) to educate and empower women of all ages to take control of their money and become successful investors in the stock market. I offer one-on-one coaching for self-directed traders who are either just starting to invest in the stock market or want to learn conservative options strategies to increase their probabilities of success.
For people without the time or inclination to manage their own portfolios, I offer professional money management as an investment advisor at Coastwise Capital Group (www.coastwisegroup.com).
You worked a summer at the CBOE — how has that shaped you?
Laurie: While I was earning my undergraduate degree from the Wharton School of the University of Pennsylvania, I completed a paid summer internship with a prestigious options market maker in Chicago. I had loved the mathematical theory behind options pricing in college, but after working in such an aggressive male-dominated environment, I lost my interest.
In 1989, most of the business was done in the chaotic options trading pits and less done on the computer. Now, in 2013, it is a great time for women to be involved in options trading. Things are different.
You talk about saving and being financially responsible — where did you learn that?
Laurie: Ironically, I became fiscally responsible as a result of being raised by a single mother who was not fiscally responsible. Her lifestyle was subsidized by my grandfather. I write about my experience in Empower: Women's Stories of Breakthrough, Discovery and Triumph which is available for purchase on my website. I am donating 50 percent of my profits to Women's Empowerment International (womenempowerment.org), which is a non-profit that makes micro-loans to women refugees so they can start businesses and generate income for their families.
Making a Million in the Stock Market
How did you make your first million?
Laurie: It took me 15 years to make $1M. I started with a $1,600 inheritance that my grandmother left me when I was 24 and invested it in the stock market. As I progressed in my public policy and lobbying career and earned higher paychecks, I continued to live below my means. I contributed a percentage of every single paycheck to a brokerage account.
My stepfather would give me $500 for my birthday and $500 for Christmas. He told me to spend it on something fun. I put every single check he ever gave me directly into the stock market. Whenever I received a bonus at work, I would put the entire amount in the stock market.
I maxed out on my 401(k) and IRA. I rented instead of tying up capital for a down payment and mortgage. When I thought of making a 20% downpayment on a condo, it made me crazy thinking that I would be putting my hard-earned money in a non-liquid state. With the stock market, I could buy and sell whenever I wanted.
At 31 I had paid off my remaining student loans. All that money that I would otherwise paid the lender went into the stock market. Since I was young, I put 100% of my money into equities, both domestic and international. When ETFs became available, I shifted the international exposure from mutual funds to ETFs.
The only investment advice I subscribed to was the Wall Street Journal, which I read every day, just like my grandfather had.
I was a millionaire right before I turned 40.
Where do you currently invest your money? Why?
Laurie: I currently invest most of my money in stock and options. I use conservative options strategies such as writing covered calls and selling put options. I teach my coaching clients how to do the same in their brokerage accounts. The beauty of these options strategies is that they are less risky than just “buying and holding” stock so most brokerage firms will allow you to trade them in an IRA. I encourage people who leave a job to “rollover” their 401(k) into a self-directed IRA.
Becoming a Young Millionaire
Is there another way to being a young millionaire without starting your own business or basically being an entrepreneur?
Laurie: Yes. I worked for a non-profit trade association, then for state government, and then for three publicly-traded corporations. If you live below your means, start investing early, continue to invest a portion of every paycheck, max-out on tax-deferred accounts, and put your money in the stock market which has higher overall rates of returns over time than bonds or CDs, you can become a millionaire too without starting your own business.
What's the biggest risk you ever took? Do you regret it?
Laurie: The biggest risk I ever took was staying in the market in 2008 when the shit hit the fan. It was also the biggest reward I ever received. As the value of my holdings was plummeting, I looked for blue-chip, dividend-paying stocks that were trading at 40 to 60 percent off their highs. It was like buying a whole new wardrobe on sale. Because of the risk I took in 2008, and the fact that I could look at my portfolio and not get spooked, 2009 became the biggest wealth-creating event in my lifetime.
If you could make one change, what would it be?
Laurie: The one change I would make is to do everything possible to inspire and educate women to quit deferring investment decisions to their male partners or family members and take control of their own money. I am attempting to change this through publication of my forthcoming book, Every Woman Should Know Her Options: Invest Your Way to Financial Empowerment.
What advice do you have for young adults and college students when it comes to entrepreneurship and money?
Laurie: The number one piece of advice is, “live below your means.” If you follow that advice, you will have money leftover to invest.
Laurie: Readers can go to my website, www.theoptionslady.com, and sign up for my free monthly newsletter. Although much of my content is directed to women, men find value from the newsletter too.
What I Learned from The Options Lady
This wasn't one of my typical millionaire profiles — a quick pop to the top — but rather, a slow and steady marathon to a million. And that's what I love about Laurie's story. This quote really highlights that:
If you live below your means, start investing early, continue to invest a portion of every paycheck, max-out on tax-deferred accounts, and put your money in the stock market which has higher overall rates of returns over time than bonds or CDs, you can become a millionaire too . . . .
What I also love about Laurie is that she understands the difference between trading and investing. While she uses options as part of her investing strategy, she still focuses on the basics of saving for retirement, living below your means, and other common-sense financial basics. I think many “traders” miss this simplicity when it comes to their portfolios.
Finally, I love that Laurie steered away from real estate. Most (actually all) of the millionaires I've interviewed this far have focused at least part of their income on real estate. That's the opposite of what Laurie did — she rented and instead used that money to invest in the stock market. Very different strategy, but it worked well for her. It just goes to show that you don't need real estate to be a millionaire.
What did you learn from The Options Lady? What are your thoughts on investing in the stock market versus investing in real estate?