At age 51, nothing about Anne Scheiber's life suggested that she would become one of the greatest investors of all time.
Her life story up until then was mostly one of crushing setbacks and disappointments. She had lost her life savings after entrusting it to her youngest brother's brokerage firm, which went bust. Over 23 years of working for the Internal Revenue Service, she passed the bar exam and became regarded as one of the top auditors, but was never promoted. She never earned more than $4,000 a year.
Still, her decades as a tax auditor presented one major opportunity: Allowing her to uncover a secret that she used to build a $22 million fortune, starting from scratch in her 50s.
"She was never looking for a quick buck."
What Scheiber noticed, from years of scrutinizing the tax returns of wealthy Americans, was that almost all of them owned stocks.
When she retired from the IRS in 1944, she had $5,000 in savings, or the equivalent of $92,000 today. Over the years, she "did nothing but study the stock market," according to the lawyer for her estate.
Over the next 50 years, she bought shares in the kinds of companies she had seen in the tax returns of America's wealthiest. Her $5,000 in capital became a $22 million fortune by the time of her passing in January 1995 at age 101.
It's a return of 440,000% that places her comfortably in the ranks of history's greatest investors. For context, a $5,000 investment in an index fund tracking the S&P 500 would have returned 25,314% in that time with dividends reinvested.
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Yet I would wager that few people know her story, possibly because her investing strategy doesn't seem bold or remarkable.
According to her broker, "She was never looking for a quick buck. Her whole idea was to get performance on a long-term basis. She felt over the long run her value would grow."
Tuning out the noise and reinvesting dividends
Scheiber bought shares of industrial companies and blue chip stocks, as well as some entertainment stocks (she was fascinated by movie studios). She never preoccupied herself with market highs or lows. She reinvested her dividends, and rarely -- if ever -- sold based on headlines.
Her portfolio contained over 100 stocks, including the soft drink giant Coca-Cola, the entertainment juggernaut Paramount (which is now Paramount Skydance), and the pharmaceutical company Schering-Plough (which merged with Merck in 2009).
As her wealth compounded, her simple lifestyle didn't change. As reported by The New York Times, she lived in a rent-stabilized studio apartment with peeling paint, rickety furniture, and dusty bookcases. She walked everywhere she went, apparently to avoid paying bus fare. Her wardrobe was simple too, with her often being seen in "the same black coat and matronly hat."
Image source: Getty Images.
Her inspirational story has three takeaways. First, you don't need Wall Street connections or insider tips to grow your money dramatically in markets. As a reclusive and perhaps even isolated retiree, Anne Scheiber had no one to point her in the right direction.
Second, you don't have to risk everything on a moonshot opportunity to make big gains. Scheiber's portfolio containing over 100 stocks meant that she practiced diversification to the letter.
Third, you don't need to start early to succeed in investing (although that helps). Remember, Scheiber was 51 when she embarked on her investing journey that would culminate in a 440,000% return.
With a 2022 study by Human Interest reporting that nearly half of respondents think you can be "too old" to start saving for retirement, this is a story that millions of people could take to heart.
There's no need to spend hundreds of hours studying stocks, as Scheiber did. A low-cost index fund that tracks the S&P 500 would also be highly diversified, allowing investors to tap into hundreds of companies' growth with a "set it and forget it" mentality. While it helps to start as early as possible, the magic of compounding means that you may need less time than you think.
