This Vermont janitor has amassed a fortune of $8 million unbeknownst to anyone around him. Here are the 3 simple techniques that made Ronald Read rich – and can do the same for you
Warren Buffett once said, “It doesn’t take extraordinary effort to get extraordinary results. You just have to do the ordinary, everyday things exceptionally well.”
It may sound too simplistic to be true, but if you doubt the wisdom of the Oracle of Omaha, listen to Ronald Read’s story.
Read, a retired gas station attendant and janitor in Vermont, died in 2015. Nothing about his life or death was exceptional other than the fact that his estate was worth $8 million after his death.
This came as a surprise to much of Read’s local community. “He was a hard worker but I don’t think anyone had any idea that he was a multi-millionaire,” his stepson told local press after his death.
Read didn’t have the career path one usually associates with a multi-millionaire. So how did he do it? Here’s a closer look at the three simple techniques that made him so rich.
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Ronald Read seems to have had a reputation for being extremely frugal. In fact, he probably could have given Buffett — who is known for being frugal — a chance.
Read’s friends recall him driving a used car and using safety pins to hold his threadbare coat together. Even after his 90th birthday he continued to cut his own firewood.
It’s a painfully simple approach: if you spend less than you earn, you can invest more and, over time, create wealth through investments.
“I’m sure if he made $50 in a week, he probably invested $40 of that,” Read’s friend and neighbor Mark Richard said, according to CNBC.
The story goes on
After his death, The Wall Street Journal analyzed Read’s personal portfolio. They discovered that many of his positions had been occupied for several years – if not decades – and had generated immense returns over that period.
In 2015, Read’s portfolio included heavyweights like Wells Fargo (NYSE:WFC), Procter & Gamble (NYSE:PG), and Colgate-Palmolive (NYSE:CL).
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Again, there’s another parallel between Read and Buffett. If these names sound familiar, it’s probably because you’ve seen some of them in Buffett’s portfolio as well. In fact, Berkshire Hathaway had a sizeable position in Wells Fargo for several years, and Procter and Gamble is still part of the portfolio.
Both investors prioritized holding long-term positions in undervalued and overlooked companies. That’s what helped Read build his multimillion-dollar fortune. For both investors, however, the key ingredient was time — and patience.
Ronald Read lived to be 92 and Buffett is now 92. Both investors have benefited enormously from living and working longer than average. In fact, 90% of Buffett’s fortune was made after his 60th birthday. If he’d retired in his early 50s, most people would never have heard of Warren Buffett.
The power of compounding is magnified over longer time horizons. In other words, investing longer is more likely to produce better returns. Buffett’s compound annual growth rate of 9.17% would have turned $1,000 into $9,000 in 25 years and $13,900 in 30 years.
To be fair, none of us can control how long we live. Instead, starting early and staying in the market as long as possible is probably the best strategy. It’s also wise to let your winners ride longer. Taking profits too early or trading your positions too frequently will incur additional costs and reduce the power of compounding.
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