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Ronald Reid, a sweeper, built a fortune of ₹68 crore by simply investing in blue chip companies. Reed invested patiently in dividend stocks and held on for the long term, leaving him with a large portfolio at the time of his death.
highlights
- An ordinary sweeper became a millionaire.
- Investing Lessons: Patience and Investing in Blue-Chip Stocks.
- Wealth worth more than Rs 68 crore created through long term investments.
New Delhi. If you meet any good stock market expert, 9 times out of 10 you will hear the same thing – ‘Stay grounded’. That means, stop thinking about earning quick money from the stock market and become a horse for the long race. If you stick there for a long time, you don’t need to try too many fancy tricks to make money. Value Research CEO Dhirendra Kumar has explained the power of simple investing with interesting anecdotes in one of his articles.
In this article written by Kumar in ET, he has narrated the story of a US man who worked at a petrol pump for 25 years and then worked as a janitor (cleaner) in a company for 17 years. The name of this person was Ronald Reed. When Reed died in 2014, he left behind a fund of 8 million dollars i.e. more than Rs 68 crore. Kumar says that Reed made this money from jobs where he got very average salaries.
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How did Reed become a millionaire?
Kumar writes that Reed never adopted a very extravagant investment strategy. He patiently invested his money in blue chip companies. Reed never thought about investing in trading tech stocks he didn’t understand. When he died, there were 95 shares in his portfolio. Most of these shares were of large cap companies. Reed had invested money in stocks like P&G, Johnson & Johnson and CVS Health.
simple investment strategy
Kumar writes that Reed’s investment strategy was very simple – invest money in quality stocks that pay dividends, then buy back shares with that dividend and leave. Kumar says that when he lost his money in Liman Brothers in the market collapse of 2008, Reed also did not make much difference because his portfolio was very diversified and this loss was very minor for him. According to Kumar, Reed’s story is a lesson for Indian investors. Just as Reed thought it right to invest in blue chip companies of America, similarly there are many quality stocks in India which have excellent dividend history. These companies may not be the topic of discussion on social media but they have created good wealth in the long term.
