3 Things the Viral $8 Million Janitor Teaches Us About Wealth

Matt Lane

https://img.particlenews.com/image.php?url=38ZZ6D_0XxE4xPt00Screenshot from the Brattleboro Memorial Hospital’s tribute to Ronald Read

Ronald Read’s Wikipedia page describes him as a former “philanthropist, investor, janitor and gas station attendant.” It’s not every day you see those words appear in the same sentence. Indeed, when Read passed away in 2014, leaving behind an unexpected $8 million, his story went viral.

Here’s a quick refresher in case you haven’t already heard it. Read came from humble Vermont roots. After a stint as an Army soldier in World War II, he returned to his home in Brattleboro, where he spent the rest of his career working first as a gas station attendant, then as a janitor.

Read lived frugally his entire life, all the while quietly investing any extra income he could find in the stock market, where he built the majority of his net worth. When his will revealed that he had been a millionaire many times over, even his family was caught off guard. Since then, his story has been covered extensively in just about every major media publication, including CNBC, Business Insider, and The Wall Street Journal.

Why did it attract so much attention? On many levels, it’s simply inspiring. “If a former janitor can do it, I can do it.” But could Read’s success be replicated in 2020? The answer is yes — with a few caveats. Let’s look at how.

1. To become a multimillionaire, buy, and hold index funds.

The bulk of Read’s wealth came from simply buying stocks in great companies, then holding them for decades. He bought his first shares all the way back in 1959. By the time he passed away, his portfolio had become massive. A few of his high-value holdings included Wells Fargo ($510k), Procter & Gamble ($364k), and Colgate ($252k).

There’s no two ways about it: buying and holding stocks works. But a word of caution: buying stocks in individual companies can be dangerous, as there’s always a risk they’ll go under. Read researched all his investments extensively before buying, but we don’t have to take that risk these days.

Instead, we can invest in index funds — a much safer alternative. Rather than putting your hope in a few specific companies, index funds allow you to invest in the entire stock market. Because the stock market as a whole always goes up in the long run, this is a stable way to increase your net worth. I wrote more about the specifics of this strategy here and here.

Nevertheless, whether you choose an index fund or individual stocks, the takeaway is the same: to build wealth, adopt a long-term mindset. Put money in the market, then don’t expect to touch it for at least two decades. Let compound interest do its thing, and you’ll be much happier down the road.

2. Invest more, spend less.

Read was notoriously frugal. Even after he became a millionaire, he drove a used 2007 Toyota Yaris and always wore a tattered denim jacket he kept intact with a safety pin. Once, someone paid for his meal at a restaurant because they thought he was poor.

His philosophy was simple: instead of buying material things, he chose to put as much as possible in the stock market, often at the expense of his appearance. Despite the fact that he earned significantly less from his day job than much of the rest of the United States, this mentality made him financially wealthy in the long run.

Read’s life shows that getting rich isn’t about how much you make. It’s about how much you invest. Build the discipline to put money in index funds every month, and you too can end up a multimillionaire.

Note: it’s OK if you find Read’s lifestyle extreme. The appropriate takeaway is that self-sacrifice is important, but you also don’t have to dress like you’re homeless in order to build wealth. Instead, find a reasonable medium. If you’re a heavy spender, know that reallocating at least some of your entertainment budget to the stock market makes your financial future healthier.

Could a janitor pull off what Read did here in 2020? Maybe not. Wage growth over the last few decades has slowed while living expenses have increased. Low-income employees may no longer be able to find extra income to stash in the stock market. If that’s the situation you’re in, internet side hustles are the answer. Learn how to generate extra income on the weekends through freelancing or e-commerce, then invest what you make from your gigs.

3. Everything you need to know is free.

Read never went to college. So, where did he learn how to build wealth? By reading The Wall Street Journal, Barron’s, and other financial publications at his local library. He also frequently talked to his neighbor, who was an adviser at Wells Fargo.

These days, financial education is even easier to access. Everything you need to know to become a millionaire is available for free through YouTube, Twitter, and personal finance blogs. YouTube alone has thousands of hours of content on how to choose an index fund, build a side hustle, increase your credit score — the whole nine yards.

You don’t have to go to school to become financially savvy (actually, most schools won’t teach you a thing about personal finance), and you definitely don’t need to buy an influencer’s internet course. In fact, most paid courses are simply compilations of publicly available information that’s just a Google away.

Now more than ever, the only thing you need to become financially educated is the will to learn. Thanks to the internet, all the knowledge necessary for success is available at your fingertips.

What really matters

Many consider Read’s story sad because he lived frugally up to the day he died, even though he had $8 million at his disposal. But consider this: according to his friends and family, Read loved investing. To him, the process of building wealth was exciting. With this in mind, it’s likely he passed away doing what he loved.

Equally important to the conversation is what he did with that money. His will dictated that $2 million would go to his family, while the remaining $6 million was split between a local hospital and library.

In this, we find Read’s final lesson: wealth is nothing without philanthropy. He may not have used his net worth for material enjoyment, but he eventually used it for spiritual enjoyment. And in many ways, that’s the best thing wealth can buy.

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