How a Janitor Made $8 Million

Written by Jimmy Mengel
Posted October 5, 2017

When you read as much financial news as I do, you tend to get pretty jaded; the sickening cycles of banking scandals, lying government officials, and ever-looming market crashes can overwhelm even the most optimistic of us.

But sometimes a story comes around that not only restores your faith in humanity, but also confirms the way you've been investing. This particular tale will both warm your heart and set you up for a lifetime of wealth.

Without further ado, allow me to introduce you to Ronald Read, a former janitor and gas station attendant  from Vermont who amassed an absolute fortune right under everyone's noses. When he passed away, he was able to leave millions of dollars to his two favorite charities: his local hospital and library branch.

To say that his community was shocked would be an understatement...

You see, Ronald lived frugally to say the least: he drove a used Toyota, he wore flannel shirts, and held his coat together with safety pins. Even in his old age he would park his car blocks away to avoid feeding quarters into the parking meters.

He was so thrifty, in fact, that locals were known to pick up his tab at the coffee shop he frequented because he appeared not to be able to afford it.

Little did they know that poor, unassuming Ronald had grown his stock investments into a war chest of $8 million!

The only clue that revealed his secret investing habit was his routine of reading the Wall Street Journal each and every day at that same coffee shop. Now, if everyone who read the Wall Street Journal was able to die with 8 million bucks, then I bet the subscription rate would go through the roof. But he didn't make his money from reading the WSJ. Even so, his strategy was just about as easy...

Here's how Ronald Read was able to retire a secret millionaire...

Don't Judge a Book By Its Cover

So, how in the world does a man quietly grow into a multimillionaire? Did he strike it big with real estate? Was he an early investor in a tech giant? Did he rob a bank?

None of the above...

Ronald Read got rich thanks to one simple word: dividends.

"He only invested in what he knew and what paid dividends. That was important to him,” his attorney noted.

Just like his attire, his stock holdings weren't anything fancy. His biggest holdings were AT&T (NYSE: T), Bank of America (NYSE: BOA), CVS (NYSE: CVS), John Deere (NYSE: DE), GE (NYSE: GE) and General Motors (NYSE: GM).

So how does one get rich on simple, dividend-paying blue-chip stocks?

The power of compound interest. When you reinvest the dividends on blue chips like the ones above, dividend yield is added to the principal, so that from that moment on, the interest begins to earn interest on itself.

In short, your money continues to snowball and becomes a money-making monster.

Albert Einstein was so fond of this strategy that he once said:

“Compound interest is the eighth wonder of the world. He who understands it, earns it...He who doesn't, pays it.”

But, luckily for you and I, it doesn't take a rocket scientist to unleash the power of compounding interest, you simply have to follow these steps...

Slow and Steady Wins the Race

I've been telling my Crow's Nest readers this since day one: the key to building a successful long-term position in dividend stocks is dollar-cost averaging.

Essentially, dollar cost averaging is buying a fixed dollar amount of a particular stock regardless of the price. Instead of, say, buying a stock one day for, say, $50 a share and just dumping all of your money into it, what I like to do is ride the trends. It's a pretty simple strategy if you can keep your cool.

It does require you to have the stomach to stick to the plan, especially when the markets drop, you just want to keep buying.

I think a lot of retail investors generally fail at this because they have it all backward. They like buying the hype and then they sell the fear. When you dollar cost average, the more shares you purchase when prices are low, it drags down your entire cost of your investment.

Purchase more shares when the prices are low and then you buy fewer when the prices are high and you kind of ride the wave along with the stock. The end result is that over time the average cost of your shares will become much, much smaller as if you were to dump all of your money into a stock all at the same time.

That is what Ronald Read did with his positions, and look how well it worked out for him. But I suspect that he wasn't buying his shares the "normal" way. I think he was buying them on the "Underground Stock Market"...

Let Your Money Make Itself

I found out about the "Underground Stock Market" after my first experience with another secret millionaire: my wife's great aunt Esther.

Like Ronald Read, Esther was an “old-school”, frugal lady with a penchant for costume jewelry and thrift store dresses. When we cleaned out her apartment, we even found years' worth of saran wrap and unused rubber bands. Esther let nothing go to waste...

But when she passed on after 98 years, we found out that she had quietly been sitting on millions of dollars. After some digging, I found out that she had used a little known stock loophole that allows regular folks like you and me to collect compound interest on a select few stocks...without ever paying a broker a dime. She never had to check her portfolio, she never paid trading fees, and she sure didn't have to fork over 3% of her wealth for a money manager to move a basket of stocks around.

In fact, her investment was locked in on autopilot, and made more and more money each and every year, without anyone having to lift a finger.

The story started when she worked for Bell Telephone Company — known back then as Ma Bell. As a young woman in the 1940s, she entered a company stock program that was — at the time — only available to employees of a select group of companies. It allowed them to accumulate shares automatically, so when those shares paid dividends, it would be dumped right back into their portfolios.

These days, the "Underground Stock Market" is available to any investor, whether they work for the company or not. If you are serious about compounding your wealth, it is a no-brainer. You can learn how to start trading underground shares right here.

Before you know it, you'll be joining Ronald Read and Aunt Esther as the next secret millionaire...

Godspeed,
jimmy-mengel-signature-fixed

Jimmy Mengel

follow basic @mengeled on Twitter

Jimmy is a managing editor for Outsider Club and the investment director of the personal finance advisory, The Crow's Nest, and cannabis stocks advisory, The Marijuana Manifesto. You may also know him as the architect behind the wildly popular finance and investing website Wealth Wire, where he's brought readers the stories behind the mainstream financial news each and every day. For more on Jimmy, check out his editor's page.

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