How to become the next Sylvia Bloom
A recent New York Times article took many investors by surprise: A frugal legal secretary, who worked at the same firm for 67 years until she retired at the age of 96, was a “closet millionaire” who amassed a fortune of more than US$9 million.
Reports claim that Sylvia Bloom joins a host of others who did not live above their means and were completely unassuming in acquiring their wealth: Ronald Read, a former petrol station attendant and janitor who died in June 2014 with a fortune of US$8 million; Grace Groner, a secretary with an estate of US$7 million; and Ronald Murin, a lifelong librarian who had an estate worth US$4 million.
What do these “secret millionaires” have in common? How were they able to accumulate their wealth? And, the million rand question: What can ordinary investors learn from them?
Over time they consistently spent less money than they made, saved the difference, invested in good companies, and were patient – lessons that all of us would be well placed to follow.
One of the most common mistakes that investors make is not realising the power of simple methods, simple rules, and simple techniques.
Every little bit helps
While it may be hard to make room in an already-tight budget for additional savings, one strategy is to try to save a little bit more as your income increases. Putting some money away every month and forgetting about it is key to creating long-term wealth. It is also important not disinvest based on adverse news headlines.
While it sounds counter-intuitive, sometimes the best thing to do once you are invested is to do nothing at all, as famously suggested by Warren Buffet.
It may be difficult to sit tight when markets are in a downturn – but selling an investment at the wrong time can destroy value. Investors who are able to tune out the market noise and only make changes to their portfolio based on a change in their objectives will set themselves up for long-term success.
Three tips for investors who want to become successful investors:
Be patient. Focusing on the short term can cloud your judgement. If you have a long-term horizon then you need to be patient and ignore the market noise. Any changes you make to your portfolio should be based on a change in your objectives and risk tolerance, not what the market is doing.
Keep it simple. This well-known principle reminds us that things work best if they are not over-complicated. The same can be applied to investing. A simple formula based on a long-term mindset that includes spending less than you earn, putting away the difference, and investing this into good companies can mean the difference to your investment success.
Find the right partners. It can be hard to know which companies to invest in, and how to invest based on your objectives and plan. In addition, the sheer choice of investment products can be overwhelming. But you don’t have to do it by yourself. Surround yourself with experts to help you achieve investment success. Choose an investment manager you trust to find the right opportunities on your behalf and consider working with a good, trustworthy and independent financial adviser to guide you on what is right for your financial circumstances.