Last week I read about Ronald Read, a Vermont gas station attendant and janitor who was able to stockpile an $8 million fortune. He passed away last year at the age of 92, but very few people knew he had that kind of money. That is until a couple of weeks ago when he left most of his estate to his local hospital and library.
Mr. Read left $4.8 million to the hospital and $1.2 million to the library.
According to reports, he was a very humble person who drove a second-hand Toyota Yaris and who never splurged except on a daily cup of coffee and an English muffin with peanut butter at the Brattleboro Memorial Hospital.
How Could a Janitor Have $8 Million?
Mr. Read was very smart with his money and was able to grow his wealth by investing in Blue-Chip Dividend stocks. He was doing what Warren Buffett has been preaching for years, “invest in what you know.”
Mr. Read’s portfolio included AT&T, CVS, Bank of America, Deere General Motors, and General Electric. “He only invested in what he knew and what paid dividends,” his lawyer Laurie Rowell told CNBC.
Nobody knows exactly what his savings regimen was, but based on the way he lived, it is assumed that he saved and invested as much as he could.
Is This Even Possible?
Many people think that you need to make a lot of money in order to be rich someday, but it has been proven time and time again that that’s just not the case.
Let’s take Mr. Read for example. Again, nobody knows how he did it, but you can get to $8 million by investing around $360 a month for 65 years – assuming an 8% return.
Thanks to the magic of compound interest, you invest a total of $280,800 in 65 years and you get a whooping $8,000,000 or so.
Mr. Read probably started saving and investing as soon as he started working, and he was fortunate enough to live for 92 years, but this doesn’t mean that we can’t do this as well.
And the point of this story is not “how to get $8 million.” The point we need to get from this is that we don’t need to make a lot of money in order to save. Chances are we’re not going to be able to get $8 million – I started saving late – but $1-$2 million is definitely doable and, quite frankly, more than enough for me.
Make Savings A Priority
One of the most important, if not THE most important advice about reaching financial independence is PAY YOURSELF FIRST.
Before I learned this very important lesson, every time I received a paycheck, I used to pay bills and used my money to go out and get groceries, and then try to save whatever I had left at the end of the month. As you already know, this plan didn’t work out too well for me.
Decide how much you want to save each month – this is when a written budget comes in handy – and every time you get paid, make sure you pay yourself first. Treat your savings like another bill. And remember to pay ALL YOUR BILLS.
Savings should be a priority, but it won’t be enough if you want to grow your money… you also have to invest, safely. You can follow Mr. Read’s footsteps and invest in Blue-Chip Dividend stocks, which are a good bet. Or you could lower your risk even more by investing in index mutual funds.
Right now I am keeping my investments somewhat safe, but I am also learning about the stock market so I can take more educated risks as I save more.
Are you saving like Mr. Read? Where would you donate your millions if you are lucky enough to save $8 million?