This man managed to build a fortune of $8 million by following Warren Buffett.

All of us want to build some wealth, and property, but many people fail to do so. Yet it's relatively easy. What do I mean? Today we're going to look at a relatively simple way to build wealth, in the form of a story of a simple man who managed to build a fortune of $8 million.

Whenever I talk to someone about investing, or read some discussion on the internet about the topic, one of the most common answers as to why people don't invest is that they simply have a crappy job, with a crappy income, and thus no money left over to invest. I personally find this excuse to be the stupidest excuse in the world, especially when it comes to people who haven't started their own family, I can still somehow understand it there. In short, when someone who doesn't have to worry about other people tells me this lame excuse here, it's clear to me that they just don't want to invest. Today's story will convince you that this excuse is total bullshit.

Ronald Read

Ronald Read.

To help you understand that investing is not just for the rich, let's first briefly introduce the main character in today's story. Ronald Read was an ordinary, simple man who came from a poor farming family. He didn't have any special education in finance or anything, not by any stretch of the imagination. In fact, you could say that this field had passed him by. He did get one first in his family though, he was the first in his family to finish high school. His working career wasn't God knows how impressive either, unless you have a gas station attendant as a dream job.

So you certainly can't say that this man had money to throw around, or that he could afford to invest heavily. Personally, I think he was worse off than some people who keep saying the same thing over and over again, that they can't invest because their salary is low, and there is no money left to invest. So how the hell did he do it? Let's tell his story from the beginning.

A boy from a poor family

Ronald was no heir to a large fortune, nor was he born into a rich family. On the contrary, he was born into a poor farming family who lived in a small house on a farm. To get to school, Ronald had to walk over 6 kilometres every day, because there was no money for a bus. His graduation from high school earned him a certain prominence in his family, as he was the first to finish high school. Unfortunately, this was during the Second World War, so after finishing high school Ronald was drafted into the army. He returned from the army in 1945.

From gas station attendant to multimillionaire

After returning from the war, Ronald found work as a mechanic and gas station attendant, where he worked for 25 years. It was during this time that he discovered investing, probably inspired by Warren Buffett himself. Why? You'll soon discover that the lives of Ronald and Warren Buffet aren't all that different.

Ronald went to the local hospital cafeteria every morning for a breakfast of a cup of coffee and an English muffin with peanut butter. After a while, the hospital director met Ronald and offered to see if he wanted to start going to the library as well, and helped him set up his library card. From then on, Ronald started borrowing books in bulk from the local library, and on all sorts of subjects. This was probably the impetus to start his investment journey. Unfortunately, we will never know when Ronald started investing, as he did not become well known until after his death. I'm getting a bit ahead of myself.

You may be wondering, why such a willingness towards Ronald? He didn't live like any other man. He tried to save as much of his paycheck as possible for investments. He drove to work in an old second-hand Toyota Yaris, the coat he wore he patched the holes in with paper clips, just so he wouldn't have to spend money on a new one. At home, for example, he heated with wood he got himself and chopped.

I'm sure if he made $50 a week, he probably invested $40 of it.

Even when he came to his traditional breakfast one day, someone paid for that breakfast for him because he thought he was a very poor person, but he had no idea he was paying for the breakfast of a future multimillionaire. At this time, certainly no one would have told Ronald that he would one day be a multimillionaire, no one would have even told him that he owned any shares at all.

He was a hard worker, but I don't think anyone knew he was a multimillionaire.

Ronald Read was a real hard worker. When he decided to retire after 25 long years of working at the gas station, he didn't just sit around for long, and found another job. After a year in retirement, Ronald decided to start working again, and found a job as a janitor at JC Penny. He probably did this to maximize his income, and thereby increase the amount of money he could invest.

When the big mortgage crisis hit in 2008, no one knew how this crisis, and especially the stock price crashes, would affect Ronald, because even his immediate family did not know how much wealth Ronald actually had, or that he was even investing in stocks. Although Ronald's portfolio included Lehman Brothers, which had failed during this period, later research showed that the failure of this bank had no major impact on Ronald's portfolio, which was sufficiently diversified.

Ronald Read died at the age of 92. Until his death he was an ordinary working man, after his death he became an investment legend, and an inspiration to many people, why? No one, not even his closest people, knew that Ronald was such a successful investor during his lifetime. The big fuss was when they started settling his will after Ronald's death. According to his will, it was revealed that Ronald had left the hospital where he went to breakfast every day and where he was cared for in his last moments of life, the sum of $4.8 million. He left $2 million to his stepchildren, people who helped him, and friends, and the remaining $1.2 million to the local library.

Ronald Reade's investment strategy

If you were expecting Ronald to buy any trendy stocks of technology companies, you will be disappointed, as Ronald avoided technology stocks altogether. On the contrary, he was a big fan of dividend-paying stocks, buying companies that paid dividends, which he then reinvested, leveraging the power of compound interest. Among the roughly 95 stocks he owned, we can find names like Johnson & Johnson $JNJ-0.5%, CVS Health $CVS-0.6%, Procter & Gamble $PG+0.3%, JP Morgan $JPM+0.1%, Wells Fargo $WFC+0.0%, and other similarly large and powerful companies.

The 10 largest positions in Ronald Read's portfolio.

So what was his holy grail in investing? We can't expect a super sophisticated strategy from a pump-up. The foundation of his strategy was consistency, and longevity. In short, Ronald tried to save most of his paycheck so that he could then put the money he earned into stocks of large, stable, dividend-paying companies. He did this, in short, every week of his life, buying more, and more, and more stocks with the dividends he collected. In short, he took advantage of the snowball effect.

Similarity to Warren Buffett?

When I was writing this story, Ronald Reade's life felt a lot like Warren Buffett's, why? Take a look at the life of Warren Buffett himself. He could easily afford an expensive and luxurious car, or a nice luxury house for example, he could be enjoying his retirement and eating caviar for breakfast, or I don't know what super rich people eat for breakfast. Instead he drives a used car to Mecca every morning for breakfast, and lives in a normal house like everyone else, oh and of course he still works at his company.

Even in terms of investing, these two were pretty similar, you remember the names I named from Ronald Read's portfolio, so look at Warren Buffett's portfolio, and see what you find there. Their approach to investing was virtually identical, both buying companies they wanted to hold forever, and in any situation.

What to take from this story?

As we can see, anyone really can invest. You don't have to live like Ronald, of course, but every penny you save, say on coffee, or beer, or cigarettes, counts, and can make you a tidy fortune in the future.

So the other thing we should take away is consistency. Ronald didn't just invest once. He invested smaller amounts regularly, in short, every time he saved money, he invested it. That's why I talked about saving on small items. For example, if you have one less beer in the pub every day, you are able to put aside 1,000 crowns every month in this way that you can invest, and you can do this every month.

The last thing we should take away is patience. Nobody who works on themselves gets so rich overnight, everything takes time. Warren Buffett gained most of his wealth after the age of 50.

WARNING: I am not a financial advisor, and this material does not serve as a financial or investment recommendation. The content of this material is purely informational.


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