Every now and then I run across a story in the news that reminds me of how many financially smart ordinary people there are. It usually happens when one of them dies and surprises the world by giving away a lot of money. The latest such story that I've seen is about Canadian teacher Roberta Langtry, who died last year at the age of 89, and who left $3.8 million to an environmental charity. She worked for 55 years, living frugally and investing in stocks and bonds. (One holding was IBM
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A similar story is that of Oseola McCarty, a washerwoman. In the summer of 1995, she made headlines in newspapers across the country by giving most of her life's savings, $150,000, to the University of Southern Mississippi.
Around 1908, Ms. McCarty was born in Mississippi -- the pre-Civil-Rights-Movement South. Not only were her means limited, but so, quite likely, were her dreams. From an early age, Oseola learned the value of a hard-earned dollar. As soon as she could work, she did, ironing clothes, for example. When her aunt fell ill and needed her help, Oseola's formal education was halted, after sixth grade.
Oseola never married, and 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, and plunked 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 savings account interest. 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. I don't know when her savings caught their notice, but had it been, say, 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, let's say, 10.5% per year, her money would have grown not to $250,000 but to $999,628 -- virtually a million dollars. Four times as much.
The lesson here is that in an effort to become your family's most beloved ancestor or a charitable cause's most beloved stranger, you should strive not only to save, but also to invest as Foolishly as possible. If Oseola had bought just a few shares of some strong performers years ago, they would have boosted her bottom line considerably.
For example, check out these average annual gains for some well-known companies over the past 20 years:
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 lives:
- 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, a 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, Indiana. But when they passed away, they surprised the town by leaving it $22 million that they'd accumulated by investing in stocks over many years.
- Thomas Drey Jr. A retired teacher, Mr. Drey 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. A retired high school 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. (If you 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 -- those who bought shares of Warren Buffett's company, Berkshire Hathaway
(NYSE:BRKa) (NYSE:BRKb), 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.
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." "It wasn't hard. I didn't buy things I didn't need ... The Lord helped me, and he'll help you, too ... It's an honor to be blessed like that."
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Home Depot and Berkshire Hathaway are Motley Fool Inside Value recommendations. Wrigley is a Motley Fool Income Investor pick.
Longtime Fool contributor Selena Maranjian owns shares of Home Depot and Berkshire Hathaway. For more about Selena, view her bio and her profile. You might also be interested in these books she has written or co-written: The Motley Fool Money Guide and The Motley Fool Investment Guide for Teens . The Motley Fool is Fools writing for Fools.