Selena Maranjian


This ordinary guy amassed almost $8 million. Here’s how he did it — and how you might follow some of his ways.

A community in Vermont was surprised in 2015 when Ronald Read, a retired gas station attendant and janitor, turned out to have been worth nearly $8 million upon his death — and left about $5 million to his local library and hospital.

How Read amassed such a vast sum may or may not surprise you, but you probably will be surprised that someone of modest means, who didn’t have a fancy job, could grow so wealthy. You may also be happy to learn that the strategies he employed are ones we can use, too.

Ronald Read’s long life — he lived to 92 — saw him doing many things that many financial experts recommend. Here’s a closer look at how he got so rich.

He was patient

For starters, he was patient. Read’s wealth grew over many decades, via the power of compounding. Here’s a simplified example, to help you appreciate the power of time and patience: Imagine that he was earning an annual growth rate of 10%. When he had amassed, say, $500,000, 10% of that would be a $50,000 gain for the year, taking him to $550,000. When he hit $1 million, though, a 10% gain would get him $100,000, taking him to $1.1 million. At the $3 million point, a 10% gain would be worth a whopping $300,000, and at $5 million, it would generate a whole half-million dollars.

He lived below his means

Ronald Read lived below his means — way below them. He drove an old, inexpensive car, and kept his old coat together with safety pins. He didn’t dine out frequently, except for inexpensive breakfasts at his local hospital’s café.

He looked more down-on-his-luck than wealthy, leading one neighbor to knit him a hat and another to pay for his meal. When visiting his lawyer, it’s reported that he would park fairly far away and take a longer walk than necessary to avoid having to put change in a parking meter.

His recreation wasn’t costly, either. Instead of paying for time on golf courses or travel, Mr. Read enjoyed chopping wood — which also saved him some money for heating. He also avoided buying too many books by patronizing the local library.

You don’t necessarily have to live as far below your means as Mr. Read did. You can simply be frugal and spend a good sum less than you bring in — and in the process, build meaningful wealth. But if you choose to employ some extreme frugality, you can really grow your money even more powerfully.

He invested in stocks

Next, Mr. Read invested in stocks. That’s rather important, because the stock market is one of the most powerful ways to build wealth. Check out the long-term growth rate for stocks vs. some common alternatives in the table below. It reflects returns from 1871 to 2012 compiled by Wharton Business School professor Jeremy Siegel:

Mr. Read also invested effectively. His portfolio featured many familiar blue-chip names, such as Procter & Gamble, JPMorgan Chase, General Electric, and Dow — companies he’d stayed invested in for many years.

He also held significant positions in companies such as AT&T, J.M. Smucker, CVS Health, Bank of America, General Motors, Deere, and Johnson & Johnson.

You could study and select individual stocks on your own, as Read did, but you don’t have to go that far. You can do quite well over the long haul by just sticking with low-fee, broad-market index funds, such as one that tracks the S&P 500 index of 500 of America’s biggest companies. Index funds are no kind of lame compromise — they tend to handily outperform most mutual funds actively managed by financial professionals: As of the middle of 2019, over the past 15 years, the S&P 500 outperformed fully 90% of large-cap stock mutual funds.

Good index-fund candidates for your portfolio include the SPDR S&P 500 ETF (SPY), Vanguard Total Stock Market ETF (VTI), and Vanguard Total World Stock ETF (VT).

He invested in dividend-paying stocks

You may have noticed that the blue-chip companies above generally pay dividends. Keeping a good portion of your assets in dividend-paying stocks tends to lead to better results than avoiding dividend payers, as various studies have shown.

For example, Researchers Eugene Fama and Kenneth French, studying data from 1927 to 2014, found that dividend payers outperformed non-payers, averaging 10.4% annual growth vs. 8.5%. That’s a meaningful difference.

Imagine Read’s portfolio. If, when it was worth $2 million, its overall average dividend yield was 3.5%, he would be collecting $70,000 from those holdings in a single year — that’s money he could redeploy into more growing shares of stock. When the portfolio was worth $5 million, an overall 3.5% yield would deliver $175,000. Better still, that income would be on top of stock price appreciation, and dividend payouts tend to be increased over time. Dividends are powerful.

He aimed to buy and hold

Mr. Read also benefited because he was aiming to buy and hold, for the long term. That doesn’t necessarily mean that one never sells — it’s good to keep up with your holdings and to sell when they are no longer promising. But you should aim to buy and hold, ideally for many years.

He didn’t retire early

If you’re aiming to be a multimillionaire (or just a millionaire), you might want to give up dreams of retiring early. Read was able to amass nearly $8 million in part by working a lot, even if he didn’t earn high salaries.

That steady income — he retired at age 76 — meant that he always had extra cash to invest. He actually did retire from his gas-station-attendant job at one point, only to go back to work later, as a janitor. Many people find that retirement is a bit more boring than expected, and they miss the socializing and structure that a regular job offers.

He kept learning

Mr. Read also was a believer in learning. He made good use of his local library, and read the Wall Street Journal regularly. The more you know about investing (and beyond), the better investor you’ll likely be.

He didn’t do everything perfectly

Finally, note that just like all of us, Ronald Read didn’t do everything perfectly. Some of his investments went south, or even belly up — Lehman Brothers is one example. Also, he held about 95 or more stocks when he died — that’s a lot to keep up with and is far more than a more manageable 10 to 20 stocks.

After all, it’s generally best to focus your money on your best ideas, not spread it far and wide. If you’re not going to follow your holdings closely and don’t have great confidence, holding more can be safer, and favoring index funds can be better still.

Overall, though, know that Mr. Read’s example is one we all can follow to some degree, and it can help us amass greater wealth. If you can sock away $500 per month for 50 years and you average annual growth of 8%, you can amass more than $3.5 million — which is pretty good!

Author: Selena Maranjian

Source: Fool: The Janitor Who Became A Multi-Millionaire by Retirement

The best mutual funds will help you build wealth over years — and can help secure your financial future.

If you like the idea of convenience, low cost, and professional assistance in your financial life, you should be quite interested in mutual funds. Don’t just buy any old funds, though, and don’t think it’s enough to just look for funds that did really well last year.

Mutual funds can save you from spending lots of time and energy studying many companies and managing investments in various stocks, but you do still need to spend a little time making sure you’re investing in good mutual funds.

Here’s how to zero in on good mutual funds, along with a list of some of the best for your money in the coming year.

Active funds vs. passive funds

A key mutual fund distinction to understand is that there are active funds and passive funds — that is, funds that are actively or passively managed. You probably imagine a mutual fund as one where lots of shareholders have pooled their money, which is managed by a team of financial professionals who scour the universe of investments and choose which ones the fund will buy and sell, and when. That’s an actively managed fund.

A passively managed one, on the other hand, requires far less brain power to run. Index funds are classic passive funds, and each one is designed to track the performance of a certain index (like, say, the S&P 500 index of 500 of America’s largest companies) by investing in roughly the same securities in roughly the same proportion.

There are close to 8,000 different mutual funds, as of 2018, plus nearly 2,000 exchange-traded funds (ETFs) — which are similar structures — according to the Investment Company Institute. The vast majority of the ETFs are index funds, while index mutual funds have grabbed 29% of the assets of all mutual funds, as of the end of the year.

What’s best for you?

If you want your portfolio to grow at an above-average rate, you’ll probably need to learn enough to select stocks that will grow at an above-average rate — and that’s far easier said than done. So you might instead opt for mutual funds that aim for above-average returns — but that might be even harder to do, because the vast majority of managed stock funds fail to do as well as their benchmark indexes. Indeed, as of the middle of 2019, fully 88% of all domestic stock mutual funds underperformed the S&P 1500 Composite index over the past 15 years, while a whopping 90% of large-cap stock funds underperformed the S&P 500.

Clearly, opting to just stick with low-fee index funds is extremely reasonable, and will likely have your portfolio outperforming most managed funds. But it is possible to find some great managed funds that will outperform, if you’re willing to take the chance and you want to put in the effort. Below are promising characteristics of funds, along with some promising fund ideas for further research. You’ll find some top index funds listed, as well.

The marks of the best mutual funds

A key factor when assessing any mutual fund is its fees. The median annual fee (“expense ratio”) for stock mutual funds was recently 1.16%, per the Investment Company Institute, with plenty of them charging more than 2%. Meanwhile, the subset of stock index funds sported a median of 0.33%. That alone goes a long way toward explaining why index funds outperform. Imagine you invest $5,000 annually in each of two funds for 25 years. If your average return net of fees is 10% in one fund but it’s only 9% in the other, you’ll end up with $541,000 in the former fund and only $462,000 in the latter — a difference of roughly $79,000.

Next, it’s natural to assess a mutual fund’s track record, and to favor those with strong average growth rates. Tread carefully there, though, and look at each year’s return, because one unusually strong (or weak) year can give a fund a somewhat misleadingly positive (or negative) average. Avoid rushing your dollars into any fund that was a top performer in the past year, too, because that reflects just a thin slice of time.

It’s well worth looking into the managers of any managed mutual fund you’re considering. See if you can dig up some interviews with them, some annual letters to shareholders, and any coverage of them in the news. Ideally, they will impress you with their candor and you’ll like their investing philosophy and approach.

Finally, look at a fund’s turnover ratio, which reflects how often its managers buy and sell securities. Specifically, a turnover ratio compares the total value of securities bought and sold in a period (such as a year or quarter) with the total value of all assets in the fund. So a turnover ratio of 100% reflects a lot of activity — as if the managers sold and replaced all their holdings. What’s wrong with that? Well, several things. For starters, it doesn’t suggest that the managers had a lot of confidence in what they bought, if they’re quickly selling. Also, all that activity can generate trading costs that are passed on to shareholders, and any gains will be fairly likely to be short-term ones, which are generally taxed at a higher rate.

Some of the best actively managed mutual funds — for 2020 and beyond
Below is a variety of well-regarded, well-performing fund candidates to consider, for any money that you choose to not park in low-fee, broad-market index funds. They’re all “no-load,” meaning that they don’t levy an up-front sales charge when you buy into them, as many other funds do.


Small-cap stocks


Fidelity Low-Priced Stock (NASDAQMUTFUND:FLPSX)

Mid-cap stocks



Large-cap value stocks


Primecap Odyssey Stock (NASDAQMUTFUND:POSKX)

Large-cap stocks


T. Rowe Price Blue Chip Growth (NASDAQMUTFUND:TRBCX)

Large-cap growth stocks


T. Rowe Price Communications & Technology (NASDAQMUTFUND:PRMTX)

Large-cap stocks


Vanguard Health Care Investor (NASDAQMUTFUND:VGHCX)

Large-cap stocks



Large-cap dividend stocks


Vanguard Dividend Appreciation ETF (NYSEMKT:VIG)

Large-cap dividend stocks


Matthews Pacific Tiger Investor (NASDAQMUTFUND:MAPTX)

Large-cap international stocks


Buffalo International (NASDAQMUTFUND:BUFIX)

Large-cap international stocks


Fidelity Total Bond Fund (NASDAQMUTFUND:FTBFX)

Intermediate-term bonds



Some of the best index funds — for 2020 and beyond
For many, if not most, people, index funds are best. Many sport ultra-low fees, which lets you keep most of any gains, and their turnover rates are low, too, as each fund only has to buy and hold the same securities as the index it’s tracking. Below are a handful of the many top-notch ones out there. (They’re in exchange-traded fund (ETF) form, which means you can buy or sell as little as a single share at any time through the stock market.)


S&P 500


Vanguard Total Stock Market ETF (NYSEMKT:VTI)

Total U.S. market


Vanguard Total World Stock ETF (NYSEMKT:VT)

Total world market


Schwab U.S. Mid-Cap ETF (NYSEMKT:SCHM)

Mid-cap stocks


iShares Core S&P Small-Cap ETF (NYSEMKT:IJR)

Small-cap stocks


Vanguard Real Estate ETF (NYSEMKT:VNQ)

Real estate investment trusts


Vanguard Intermediate-Term Bond ETF (NYSEMKT:BIV)

Intermediate-term bonds


Schwab U.S. Aggregate Bond ETF (NYSEMKT:SCHZ)

Total bond market



It’s hard to beat mutual funds for convenience, and the best ones will have your money growing powerfully over many years. Take some time to learn more about mutual funds, so that you can make smart, informed decisions regarding them.

Author: Selena Maranjian

Source: Fool: The Best Mutual Funds to Buy in 2020

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