This janitor in Vermont amassed an $8M fortune without anyone around him knowing. Here are the 3 simple techniques that made Ronald Read rich — and can do the same for you
Warren Buffett is reported to have once said, “You don’t need to have extraordinary effort to achieve extraordinary results. You just need to do the ordinary, everyday things exceptionally well.”
It might sound too simplistic to be true, but if you doubt the Oracle of Omaha’s wisdom, you should hear the story of Ronald Read.
Read, a retired gas station attendant and janitor in Vermont, passed away in 2015. Nothing about his life or death was extraordinary, except for the fact that his estate was revealed to be worth $8 million after he passed away.
This was a surprise to much of Read’s local community. “He was a hard worker, but I don’t think anybody had an idea that he was a multimillionaire,” his stepson told the local press after his death.
Read didn’t have the type of career path you’d typically associate with a multimillionaire. So how did he pull it off? Here’s a closer look at the three simple techniques that made him so wealthy.
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Ronald Read seems to have had a reputation for being extremely frugal. In fact, he likely could have given Buffett — who is famously frugal — a run for his money.
Read’s friends remember him driving a second-hand car and using safety pins to hold his worn-out coat together. He even continued to cut his own firewood well after his 90th birthday.
It’s a painfully straightforward approach: Spending less than you earn leaves you more to invest and generate wealth over time through investments.
“I’m sure if he earned $50 in a week, he probably invested $40 of it,” said Read’s friend and neighbor, Mark Richard, according to CNBC.
After he died, the Wall Street Journal analyzed Read’s personal portfolio. They discovered that many of his positions were held for several years — if not decades — and had delivered 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, here’s another parallel between Read and Buffett. If those names sound familiar it’s probably because you’ve seen some of them on Buffett’s portfolio too. In fact, Berkshire Hathaway had a sizable 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 create his multimillion-dollar fortune. However, for both investors, the key ingredient was time — and patience.
Ronald Read lived to 92 and Buffett is 92 years old now. Both investors have benefitted immensely from living and working longer than average. In fact, 90% of Buffett’s fortune was generated after his 60th birthday. If he’d retired early in his 50s, most people would have never heard of Warren Buffett.
The power of compounding is magnified over longer time horizons. In other words, investing for longer is more likely to deliver better returns. Buffett’s compounded 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 for as long as possible is probably the best strategy. It’s also advisable to let your winners ride for longer. Taking profits too early or trading your positions too frequently adds costs and diminishes the power of compounding.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.