As value investors, both KC Lau and I had spent time studying the portfolios and investment philosophies of investment legends like Warren Buffett. 

But, the thing is: “Can we (ordinary people) do what Buffett is doing?”. Is such a method of investing only for the smart, intelligent and the wealthy?

Here, what if I could introduce you to a person who: 

  • Was born poor, 
  • Finished high school, 
  • and earned a modest living throughout his life

but yet, accumulated an estate of nearly US$ 8 million at the age of 92 when he passed on in 2014. His estate consisted mostly of U.S. stocks and they had been bequeathed to his family & friends, local hospital and library. But to me, his real legacy is his wealth accumulation story, which is studied by investors worldwide even today. 

This person is Ronald Read, probably the world’s most famous janitor. 

So, how did he (a janitor) accumulate such massive wealth? 

Well, according to reports, studies had shown that there are 5 main factors that had contributed to Ronald Read’s wealth. Here, I’ll make a list of what these are and I’ll share my perspective on the extent of how we can practice them so that we can improve our financial lives: 

Factor 1: Frugality 

Ronald Read was not known to be a multimillionaire by his family and friends. It is reported that he lived a modest lifestyle to the extent that he was believed to be a poor person who couldn’t afford his meal. Definitely, there was a huge gap between the amount of wealth he has and the amount he chose to spend. 

While I don’t think or advocate an extremely frugal lifestyle, but if your desire is to build portfolios, there is no way you can do so if you: 

  • Earn $5k a month = Spend $5k a month. 
  • Earn $10k a month = Spend $10k a month. 
  • Earn $15k a month = Spend $15k a month. 

The faster way to raising money for investments would be:

  • Earn $5k a month = Spend $3k a month (Invest $2k a month)
  • Earn $10k a month = Spend $4k a month (Invest $6k a month)
  • Earn $15k a month = Spend $5k a month (Invest $10k a month)

Personally, that’s what I did. As my income grew over time, I was “slow” to have an upgrade in lifestyle. I prefer to invest the bulk of my active income and would spend my passive income (dividends) for enjoyment (eg. movies, dinners, travels and … etc). 

Factor 2: Big Wealth from Boring Companies

At 92, Ronald Read owned at least 95 stocks in his portfolio. From reports, Read held onto these stocks for the long-term, which refers to years and decades. So, the top 5 stocks that Read held in his portfolio were as follows:

  • Wells Fargo: US$ 511k
  • Procter & Gamble: US$ 364k
  • Colgate-Palmolive: US$ 252k 
  • AMEX: US$ 199K
  • J.M. Smucker: US$ 189k

Here, we can see that Read has a tendency to focus on “boring companies” that he can understand. He doesn’t try to predict, speculate or catch the “new wave” in the market. He keeps investing simple. Also, Read’s choice of stocks are stocks that are financially strong and pay out dividends. It is reported that Read would reinvest his dividends received in these stocks and so, had compounded wealth. 

Factor 3: Mistakes & Diversification

Ronald Read had invested in Lehman Brothers, which went bankrupt in 2008. In that sense, his investment was a mistake. But still, his portfolio remained strong as it was well-diversified into 95 other stocks that are financially solid. 

Like most, I did make my fair share of investment mistakes. They are chances for me to learn and improve as investors. Even today, I’m still learning. The more I’d learnt, the greater my chances of making better investments. So, what is vital in investing is to “just start” after you had adopted the right mindset and investing skills and “learn as you gain more experiences”.  

Factor 4: An Attitude of Learning 

Ronald relied upon The Wall Street Journal, Barron’s, and the local library in the feeding of his investment knowledge. 

Personally, I’m impressed with his attitude of learning. No college degree. It’s ok as there is always a public library and affordable resources to read and learn. 

That is a huge contrast to many people who have university degrees, but yet, do not want to read annual reports and learn how to invest before investing. Today as I write, I’m positive that we have more time, effort and energy to learn about investing as a result of bookstores and technology. So, if you feel that you aren’t that smart or wealthy to be successful in investing, just look at Ronald Read. 

All in all, the 4 factors that could contribute to our wealth as investors are: 

  • Grow income faster than expenses. 
  • Boring companies can produce big wealth in the long-term. 
  • Expect mistakes and build a diversified portfolio. 
  • Continue to have an attitude of learning and improvements. 

To speed up your learning curve in building U.S. stock portfolios, check out: 

Link: Growth Vault

In it, we’d condensed years of learning and experiences so that you would limit, reduce and avoid unnecessary investment mistakes that might cost thousands / tens of thousands and build a stock portfolio that could compound wealth over time, just like Ronald Read.

Ian Tai
Ian Tai

Financial Content Machine. Dividend Investor. Produced 500+ Financial Articles featured in in Malaysia and the Fifth Person, Value Invest Asia, and Small Cap Asia in Singapore. Regular Host and Presenter of a Weekly Financial Webinar with Co-Founded, an online membership site that empowers retail investors to build a stock portfolio that pays rising dividends year after year in Malaysia and Singapore.

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