In May of 2023, Simon Gibson died at the age of 94 and left most of his £100m estate to charity. The Times described him as a ‘Frugal Farmer‘, but in reality he inherited his fortune from his uncle Lord Glanely in 1942. For those of you that are not in line to inherit a shipping fortune, we think that there is a more encouraging (if not perfect) example from the other side of the pond.
Ronald Read died 9 years ago, at the age of 92, in the small American town of Brattleboro, Vermont. For the last 17 years of his life he had been a part-time janitor at J. C. Penney and so the town were shocked to discover that he was worth $8million ($6million of which he left to the local hospital and library).
Ronald came from a poor family and had to walk the 4miles from his parents’ tiny house in Dummerston to his school in Brattleboro, every day. After his army service during WW2 he worked as a gas station attendant for 25 years. Nothing marked him out as a potential millionaire philanthropist.
His secret was a simple one, he spent less than he earned and invested the balance in the US stockmarket. His hobbies were stamp/coin collecting and chopping wood.
“How a man of modest means accumulated so much wealth
contains exemplary lessons for saving that apply to all of us.”
– Barry Ritholtz, Wall Street Journal
The one lesson that we can take from his story is that it is important to always have surplus income in our accumulation phase. What turns the story into a parable though, is that it shows that time makes everything alright in the end. Ronald didn’t get every investment decision correct (he was invested in Lehman brothers when they went bust in 2008) but he was invested for so long in the end that such losses were smoothed out by the gains.
Much is written about Warren Buffett and Charlie Munger’s success with their investment firm Berkshire Hathaway. Warren is currently 92 and worth circa $98billion. He is rated as one of the most successful investors of all time. A large portion of that, however, was accumulated after his 50th birthday. And well over $70billion came after he qualified for Social Security benefits, in his mid-60s. This article by the ever brilliant Morgan Housel explains how a long-life and compounding made them so wealthy.
Time is the one budget that we can’t quantify for ourselves and so we have to work on the basis that we will live to Simon, Ronald, Warren and Charlie’s sort of age. If we plan on that basis then everything else will work itself out.
Whilst we might advise a slightly better balance of spending and saving in life than Ronald chose, who is to argue if he was content with his life.
“But there is also a cautionary tale about recognizing the value of
your finite time here on Earth. Perhaps learning to enjoy life
while you can is part of that equation.”
– Barry Ritholtz, Wall Street Journal