In his hometown of Brattleboro, Vermont, Ronald Read was known as a quiet and unassuming man. He was often seen around town gathering firewood in his tattered jacket. One resident, worried that his baseball hat wouldn’t keep him warm enough, knitted a hat for him. Once a stranger, assuming he was poor by his appearance, paid for his breakfast at a local diner. When he visited his attorney’s office, he parked his 2007 Toyota Yaris far away so he wouldn’t have to pay for parking. After he died last June at the age of 92, residents were stunned to learn that he was worth more than $8 million and left most of it to the town library and hospital. So how does a former gas station attendant and janitor accumulate such a fortune and what lessons can we learn?
- There is honor in work. It is undeniable that the Ronald Reads of the world are not afraid of hard work. To graduate from high school (the first one in his family to do so), Read would walk or hitchhike to school four miles each day. When he returned home from World War II, he went to work at a local gas station working as an attendant for the next 25 years. When retirement didn’t suit him, he went to work for JCPenney as a janitor until 1997. Thereafter, he was regularly seen around town cutting firewood until he was more than 90 years old.
- Live below your means. Wealth is not the same as income. Regardless of your income, if you spend what you earn each year, your not getting wealthier, your just breaking even. While Ronald Read took frugality to an extreme, he was able to accumulate such wealth because he consistently spent less than he earned.
- Invest wisely for the long term. After Read died, it was discovered that he had a five inch stack of stock certificates – many of which he had owned for decades. Most of them were dividend paying blue chip stocks in very familiar companies such as General Electric, AT&T, John Deere, Proctor & Gamble, etc. His vast portfolio was diversified and avoided technology stocks and speculative investments. For decades, this strategy has been shown to produce positive earnings which compound over time. As Albert Einstein purportedly stated, “compound interest is the most powerful force in the universe.”
- Keep learning. Mr. Read is proof that you are never too old to learn and you don’t need a fancy degree to be a wise investor. Read made a habit of regularly reading The Wall Street Journal and was frequently a patron of the local library. After all, an $8 million portfolio does not happen by chance.