The Daily Interview: A Different Kind of Model Portfolio
Would you listen to a stock tip from a former model? Maybe you should.
Personal Finance Author
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Moody's Investors Service,
Here Summers describes how she went from living paycheck to paycheck even as a highly paid model, to saving and investing with the best of them.
TSC: What's Get in the Game! all about?
Summers: I got it together at age 27, after I'd had two careers -- the first as a fashion model and the second as a stockbroker in Asia. Once I took control of my personal finances, I realized others could do the same. I've tried to spell it out in my book as basic, easy, fun and engaging information. It changed my life and how I felt about myself and what I felt I was capable of.
TSC: What on earth prompted you to become a broker with Jardine Fleming in Hong Kong? How did that opportunity come your way when you were a model at age 23?
Summers: It sounds like a stretch, but I did grow up with a family that was in banking and finance. My stepfather was president of a bank, Bank Espirito Santo in Miami, and my mother became a stockbroker for Merrill Lynch (MER) when I was in my early 20s. Even though they didn't talk to me about money, I had wanted to exit the modeling world, which I joined at age 16, when I was 19 or 20.My time at Jardine Fleming was my collegiate experience, as I was unable to attend college during the years I was modeling. I learned a tremendous amount about the economy and finance while I was there; it was an incredibly interesting time because in 1997, the U.K. handed over Hong Kong to the Chinese. Also, just afterwards, you saw the Hong Kong dollar, the Philippine peso and the Thai bhat all devalue. TSC: You spoke to a group of young women at Smith College earlier this week. What kind of a reaction did you get from them? Do they seem to know much about finance and investing -- or even care? Summers: They obviously were novices when it came to money and investing, but they were very keen and eager to want to get started and to take responsibility for their personal finances. Sure, it's easy to view money as boring and investing as difficult, even futile. I try and tell young women that, yes, they are qualified to invest and that it can have a great effect, no matter how much or how little they are making. I myself used to be living paycheck-to-paycheck and had tremendous credit card debt. TSC: How could you possibly have been living paycheck to paycheck when you were a model? Summers: I don't know if you know the income stream of models, but even if you make $1,000 a day, there's no steady income stream. You can work one day and not work for two months. It's also a business where you are surrounded by those in the high-fashion business and are expected to wear the latest designer clothes. People's illusion of the fashion business is that you make tons and tons of money and everyone's Kate Moss and it's all this fabulousness. Yes, I was with one of the top agencies, and yes, I did work often, but between all of the travel and the quality of life that I was expected to maintain, I never took responsibility for my money and I definitely lived paycheck to paycheck. And, I was never on the level of an ubermodel, like Christy Turlington or Linda Evangelista. Again, even when I went on to become a broker in Asia, and was learning about the global economy, I never once understood why it was important and critical as a young woman to get started investing. Again, as a broker, I continued living a high-standard life. It's also not unusual for brokers to await their year-end bonuses to pay off their credit-card debt or the cost of their most recent toys, be it a car or a boat. That was my experience in both those worlds. TSC: But saving is really hard for young women, especially those in their 20s, some of whom may have chosen low-paying entry-level jobs in fields like advertising. How can they possibly save money when they're barely making enough to pay rent? Summers: You need to understand the "latte factor." Let's say you spend $2.50 each workday on a latte from Starbucks. That $2.50 a day, saved, will give you $50 a month. That $50 invested in the market, consistently on a monthly basis over 40 years, will yield you approximately half a million dollars -- if we go by the stock market's historical rate of return of 12% a year since the late 1920s. So, if you are 20 and even making as little as $20,000 a year, and you save that $2.50 a day on coffee, or even on Chinese take-out food or on a taxi, you can be saving for your retirement. So even as a young woman, you've got two powerful tools: you've got time and you've got compound interest. It doesn't matter if you are making $20,000 or $100,000. If you are not on a budget, it's going to be a lot more difficult to find that $2.50 a day. TSC: I'm very surprised that you are very open in your book about admitting, especially now, that when you were younger you expected to be taken care of by marrying someone wealthy. Summers: I think it's true of many women, in the back of our subconscious, that this is how it's going to turn out for us. I remember my grandmother always telling me as a child, "It's just as easy to fall in love with a rich man as it is a poor man." Now that I have empowered myself by getting my financial life together, finding someone to step in and take care of me doesn't even cross my mind. TSC: What have you been doing with your money over the past grueling 18 months and what would you recommend investors focus on now? Summers: I am focusing on the long term, even though it's been volatile and we are now in a crisis. I'm invested totally in mutual funds, and I hold some funds that have a high concentration in technology, and they've been crucified. But I don't obsess over my retirement accounts. I would even tell a 40- or 50-year-old woman that they don't have to worry, either, because the retirement age has been pushed up, and even they are looking at a 30- or 20-year horizon. I'm a big believer in the markets. They will come back. As far as I am concerned, this is a great time to be dollar-cost averaging oversold companies. For the most part, we just need to hang on. We know airline stocks have been hammered. We know that insurance companies are going to suffer and that the hospitality industry is grappling with high vacancy rates. I'm looking at construction companies, defense contractors, automobile companies that also produce heavy trucks and pharmaceutical companies.
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