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Ordinary People, Extraordinary Wealth

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We often don't realize just how many ordinary people are financially savvy -- until one of them makes headlines for giving away a whole lot of money.

The well-funded washerwoman
In the summer of 1995, washerwoman Oseola McCarty popped up in newspapers across the country after she gave most of her life's savings, $150,000, to her home state's University of Southern Mississippi.

Ms. McCarty was born in 1908 in the heart of the segregated South, with means that were likely as limited as her dreams. From an early age, she learned the value of a hard-earned dollar. As soon as she could work, she did, ironing clothes among other odd jobs. When her aunt fell ill and needed her help, she ended her formal education at the sixth grade.

McCarty never married. She lived for three-quarters of a century in a small, simple house, washing clothes for a living. Not owning a car, she walked everywhere, pushing a shopping cart a mile each way to and from the grocery store. Over the years, she continued to put aside whatever money she could, plunking her savings into local banks.

Her bankers, when they noticed how sizable her savings had grown, stepped in to help her invest it, so that she would earn more than the meager interest of a savings account. They moved her money into the likes of CDs and conservative mutual funds. Did they do her a favor? You bet. (They also looked after her in non-financial ways -- convincing her to buy an air conditioner, for example.)

The power of time
But could the bankers have done more? Perhaps. If her savings caught their notice 30 years earlier, her gift would have ended up a lot bigger.

It appears that she had accumulated about a quarter of a million dollars by 1995. Let's say that she had only $50,000 in 1965, 30 years earlier. Had the bankers invested her in an S&P 500 index fund, earning maybe 10.5% per year, her money would have grown not to $250,000, but to $999,628 -- almost a million dollars.

If you, too, want to become your family's favorite ancestor, or a charity's most beloved stranger, simply saving money isn't quite enough. You need to invest those savings as Foolishly as possible.

If Oseola had bought shares of these well-known companies 20 years ago, she would have enjoyed the following average annual returns:

  • Home Depot (NYSE: HD  ) , 16.9%
  • Colgate Palmolive (NYSE: CL  ) , 17%
  • Clorox (NYSE: CLX  ) , 13.5%
  • ExxonMobil (NYSE: XOM  ) , 14%
  • Intel (Nasdaq: INTC  ) , 16.9%

When Ms. McCarty died, one of her bankers wrote to me, saying: "I have often tried to explain to folks that Miss McCarty's most remarkable feat was living as long as she did. She also found a way to save a little bit of money every week. Time was able to turn even the modest returns of her early investments into hundreds of thousands of dollars. If we had been able to introduce her to equities earlier, she would have left millions instead of thousands."

Still not convinced?
Here are a few more examples of how ordinary people can amass significant wealth in their lifetimes:

  • Monsignor James McSweeney. Earning a sub-poverty-level income for decades as a Catholic priest, he focused on his investments in his free time, and was worth nearly $1 million when he died.
  • Genesio Morlacci. This 102-year-old former part-time janitor and dry cleaner left $2.3 million to Montana's University of Great Falls.
  • Gilmore and Golda Reynolds. They seemed like ordinary next-door neighbors in Osgood, Ind. But when they passed away, they surprised the town by leaving it the $22 million they'd accumulated by investing in stocks over many years.
  • Thomas Drey, Jr. This retired teacher spent a lot of time researching companies at the Boston Public Library. Upon his death, he shocked the library by leaving it $6.8 million.
  • Jay Jensen. Another retired teacher, Jensen has lived frugally, investing steadily in blue-chip stocks for some 40 years. He never earned more than $46,000 per year, but he turned that into several million dollars, most of which he's giving away.
  • Florence Ballenger. Ms. Ballenger was another teacher who lived frugally but well (often traveling around the world). Through investing, she and her husband accumulated more than $6 million.
  • Gladys Holm. She was a Chicago secretary whose salary peaked at $15,000 before she retired. Her secret was paying attention to what stocks her successful boss was buying and selling, and often following suit to a smaller degree. Upon her death, she left $18 million to a children's hospital. (Don't have a savvy boss? You might find reliable recommendations in our newsletters, among other places.)
  • Donald and Mildred Othmer. The Othmers were members of a smart group of people who bought shares of Warren Buffett's company, Berkshire Hathaway (NYSE: BRK-A  ) (NYSE: BRK-B  ) , and held on for decades. They invested about $50,000 in the 1960s, and upon their deaths in the 1990s, their estate was worth an amazing $800 million.

Oseola's lessons
I'll end with a great lesson that Oseola taught us. In her own words, from her own website: "A smart person plans for the future. You never know what kind of emergency will come up ... You have to take responsibility for yourself."

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Further frugal Foolishness:

Intel, Home Depot, and Berkshire Hathaway are Motley Fool Inside Value recommendations. Berkshire Hathaway is a Motley Fool Stock Advisor selection. The Fool owns shares of Berkshire Hathaway, and shares and covered calls of Intel. Try any of our Foolish newsletter services free for 30 days.

This article was originally published on Oct. 30, 2006. It has been updated by Dan Caplinger, who owns shares of Berkshire Hathaway. Longtime Fool contributor Selena Maranjian owns shares of Home Depot and Berkshire Hathaway. The Motley Fool is Fools writing for Fools.


Read/Post Comments (4) | Recommend This Article (15)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On November 24, 2008, at 7:13 PM, dividendgrowth wrote:

    There are only 8 names out of 270 million Americans not considered rich, so it's statistically completely irrelevant.

    We can basically say they got rich because they got lucky.

    Actually, you may do better by playing Vegas or buying lotteries.

  • Report this Comment On November 24, 2008, at 10:36 PM, redneckdemon wrote:

    Actually, thats eight names that have been selfless enough with their earnings to give them away in large chunks.

    I guess they got lucky by actually investing, as opposed to just sitting on their cash in a savings account or stuffing it in the mattress.

    The lesson here was to DO something with your money, besides spending it on luxerys and junk you don't need. I wonder how many of them have credit cards? I wonder if any of them refinanced their homes, or bought new cars every 5 years?

    I also wonder how many other old-timers have done the same thing, leaving their wealth to their families instead, and missing out on the big headlines?

  • Report this Comment On November 25, 2008, at 6:51 AM, TicoHombre wrote:

    Selana,

    I love articles like these. You really get the sense that if these ordinary "Joes" and "Janes" can do it, so can we. Now, if you could highlight a few more details about their stories in the future, that would be cool. Thanks for the research and the lesson taught. Incidentally, it occurs to me that all these people lived and saved/invested through several economic upheavals where the media and other must have bee talking like it was the end of the world. Yet they pressed forward. Thanks again!

  • Report this Comment On November 25, 2008, at 6:52 AM, TicoHombre wrote:

    Sorry about that, Selena! I hate it when my name is misspelled.

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Selena Maranjian
TMFSelena

Selena Maranjian has been writing for the Fool since 1996 and covers basic investing and personal finance topics. She also prepares the Fool's syndicated newspaper column and has written or co-written a number of Fool books. For more financial and non-financial fare (as well as silly things), follow her on Twitter...

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