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Sunday, December 6, 2020

The Janitor Who Became a Multi-Millionaire By Retirement

We always portray someone who is a multi-millionaire to have lavish lifestyles. Usually, we think they live in a big mansion, drives a nice sports car, and own many other expensive things. Moreover, we often believe that to become a multi-millionaire, you need to have a high-paying job such as becoming a CEO, Doctor, or Lawyer.

I was also naïve when I was still young. I always thought that to become a multi-millionaire, you need to make a lot of money. However, did you know that to become a multi-millionaire does not require many of these traits? You will be surprised to find out that you do not need to earn a massive paycheck to become a millionaire. In this article, I want to tell the story of a Vermont-based janitor and gas station attendant name Ronald Read who secretly amassed multi-million-dollar wealth. I will explain how he did it and how we can apply it in our life as well.

Who is Ronald Read?
Before I start explaining how Ronald Read became a multi-millionaire just by working as a janitor, let me give a brief introduction about him. He was an American philanthropist, investor, janitor, and gas station attendant. He grew up in Dummerston, Vermont, in an impoverished farming household. Ronald lives an average ordinary life, and no one has expected him to be a very wealthy person. Even his family members were shocked to find out about his hidden wealth.

When he passed away in 2014, he received media coverage in numerous newspapers and magazines. He had left multi-million dollars of his wealth to be donated to the local library and hospital. People were shocked by this news, and no one has expected him to be a wealthy person. Many thought he was a poor person who works as a janitor.

How he acquired his massive wealth is not rocket science, and anyone can also apply this technique to their own life. I will explain the secrets of how Ronald Read became a millionaire despite working just as a janitor.

He was very patient.
For starters, he was patient. Ronald Read was able to grow his wealth over many decades, thanks to the power of compounding. Here is 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 $1,000,000, though, a 10% gain would get him $100,000, taking him to $1,100,000. At the $3 million points, a 10% gain would be worth a whopping $300,000, and at $5 million, it would generate a whole half-million dollars.

The power of compound interest is the key factor in how Ronald Read accumulated multi-million dollar wealth before his death. I am very impressed with how compound interest can result in anyone to become very wealthy. If I also can be patient just like Ronald Read, I can also become very wealthy. Of course, this is considering if I have a very long lifetime horizon.

He Lived Below His Means.
Ronald Read lived below his means. He drove an old, inexpensive car and kept his old coat together with safety pins. He did not dine out frequently, except for inexpensive breakfasts at his local hospital café. 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. Also, he also avoided buying too many books and often goes to the local library to read.

If I have seen Ronald Read in real life, I would not have expected him to be a multi-millionaire. Ronald lived a lifestyle that is very humble despite having massive wealth. You do not have to follow how Ronald Read lived his life entirely so that you can become a wealthy person. I know there is more to life than just to save and invest your money. However, following some of his traits of living below your mean can help you become wealthy. What I am trying to imply is that you should have a budget when managing your personal finance. This is so that you do not overspend and have some leftover to be invested.

I am also living below my mean when it comes down to spending. I believe that living a simple life can enable me to invest more of my income. Of course, I do not plan to be living frugally forever. Yes, I am living pretty frugally now; however, I plan to increase my monthly spending budget once I acquire more wealth of my own. I'm trying to say that if I reached a certain level of wealth, I would readjust my monthly spending budget.

Similar to Ronald Read, my income for working in my dad's company is not much. I have no choice but to live below my mean in order for me to be able to invest more of my income. By doing this now early in my life, I can then enjoy the wealth I have built later on in life. If I am not living below my mean and investing most of my income now, I cannot build the wealth I want in the future.

He Invested in the Stock Market.
Next, Mr. Read invested in the stock market. This is an essential fact of how Ronald Read was able to build massive wealth. The stock market is one of the most powerful ways for someone to build wealth. By investing in the stock market, you can compound your wealth and increase your net worth. You cannot merely just save your money in a bank account. In order for someone to become wealthy, you need your money to work for you.

Ronald Read invested effectively. His portfolio featured many familiar blue-chips names, such as Procter & Gamble, JPMorgan Chase, General Electric, and Dow. He also held significant positions in companies such as AT&T, CVS Health, Bank of America, General Motor, and Johnson & Johnson. Ronald learned how to invest in the stock market by reading books on investment in his local library. By learning how to invest in the stock market, people can invest safely without making a mistake. This is crucial to know how to build wealth. You do not want to make a mistake that can cause you to lose your hard-earned money.

If readers do not want to go to the trouble of learning how to invest in the stock market, you can simply invest in index funds. Index funds are no kind of lame compromise. They tend to outperform most mutual funds actively managed by financial professionals handily. Good index-fund candidates for your portfolio include the SPDR S&P 500 ETF (Ticker: SPY), Vanguard Total Stock Market ETF (Ticker VTI), and Vanguard Total World Stock ETF (Ticker: VT).

Personally, I could have invested my partial income and savings in Index funds. However, I enjoy the process of choosing stocks I want to invest in. I like analyzing companies' stock on my own and feel that this can be a useful skill for me in the future. If you are lazy and don't have the motivation to learn how to invest in the stock market, I recommend investing in index funds. It is a safer option than trying to invest in the stock market without the proper knowledge.

He Invested in Dividend-Paying Stocks.
Ronald Read's portfolio consists of dividend-paying stocks. Keeping a good portion of your assets in dividend-paying stocks tends to lead to better results than avoiding dividend payers. 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 is a meaningful difference.

Imagine Read's portfolio. If his portfolio were worth $5 million, an overall 3.5% dividend yield would deliver $175,000. That income would be on top of stock price appreciation, and dividend payouts tend to be increased over time. He can redeploy the dividends he received into more growing shares of stock. Dividends are powerful!

I was also managing my own stock portfolio on my own since the portfolio split in October 2015. Just like Ronald Read, I am also investing my money into dividend-paying stocks. I am very impressed that he has many similarities to me. I believe there are many benefits to investing in dividend-paying stocks. I like the feeling of receiving dividends (passive-income) from my portfolio, and having these payouts enables me to reinvest back in dividend-paying stocks of my choice. Moreover, when my retirement time comes, I can receive a passive income without selling my stocks. I can use this passive income coming into me to pay for my expenses and living cost.

He Did Not Retire Early & Kept Learning.
If you aim to be a multi-millionaire (or just a millionaire), you might want to give up the dream of retiring early. Ronald Read was able to amass nearly $8 million in part by working a lot, even if he did not earn high salaries. He retired at the age of 76, which means he works till he was old before retiring. When Ronald decided to retire, he was bored with his life. He eventually went back to work as a janitor later on. Also, Ronald Read 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, the better investor you will likely be.

Personally, I want to retire in the year 2035. This is about 14 more years to go before I decide to retire. After learning the life of Ronald Read, I might actually change my plan to retiring in 2035. I probably have accumulated a pretty impressive amount of wealth by that time; however, I probably will not retire completely. I do not think I will quit working, but to work on projects, I have passion and interest in. Furthermore, I also plan to increase my monthly spending budget to spend more on leisure. I want to do things that I enjoy and have the financial freedom to do anything I want in life.

My dad is considered to be living in his retirement now. Even though he does not work like how he used to when he was young, he is still in charge and deciding for his company. He did not wholly stop doing anything productive in his life. He works on things he has passion and interest in. For example, he enjoys spending his time renovating his house. He always makes new progress to the house and makes it great for our family to live in.

I enjoy living in my parents' house. Since moving back from San Francisco to Jakarta, Indonesia, I stayed in my parents' house. It has been a few years already, and I always see something new being renovated in the house all the time. My dad has put a lot of work and effort into making the house look incredible and comfortable for the family to live in. This is the prime reason why I decided not to move out of my parents' house. Living in the house, my dad has built feels like living in a five-star hotel.

The whole purpose of acquiring financial independence is not necessary for you to quit working for the rest of your life. However, it gives you the ability freedom to choosing what you enjoy doing. It is going to extraordinarily boring and meaningless if you are doing nothing at all. Yes, I am setting my financial goal towards early retirement, but this does not mean I will do nothing with my life. I want to work on things I have passion and interest in, just like my father.

In Conclusion
I hope by writing this article, readers can know the life of Ronald Read. Despite having to only work as a janitor, he could retire with a multi-millionaire net worth. He achieved this by living below his mean and being disciplined in investing in the stock market. I hope seeing his life can be an inspiration for you guys. You still can be very wealthy by following some traits of Ronald Read's life.

I believe there is no excuse for anyone to complain about becoming wealthy. If Ronald Read was able to amass multi-millionaire wealth working as a janitor, you could do it too. All you need to do is to be dedicated and disciplined in managing your personal finance.
I am glad that I am doing many things similar to what Ronald Read did in his life. I believe I am on the right track to becoming a wealthy person in the future. I hope I can successfully achieve this financial goal in my life. I want to have the freedom to do things I enjoy and have a passion for doing, just like what my father is currently doing in his life now.


  1. Replies
    1. LOLS Thanks Jason Goh!! I appreciate you taking the time to read my article.