Ronald Read: How an Ordinary Man Built a Million-Dollar Portfolio

How Did He Manage to Do It?

That is exactly what we will explore in this article. In my opinion, it is a story well worth paying attention to – not only because of the sheer size of his wealth, but above all because of how he managed to build it.

His story is not about a single brilliant investment, a miraculous stock tip, a spectacular investment success, or simply luck. It is primarily a story about time, frugality, regular investing, diversification, and the ability to let your money work for decades.

Who Was Ronald Read?

Ronald came from a poor farming family and grew up in very modest circumstances. As a young man, he walked or hitchhiked more than four miles each day to attend high school. He became the first member of his family to graduate from high school and later joined the U.S. Army during World War II.

He first served in North Africa, later as a military police officer in Italy, and eventually in the Pacific. He survived the war and returned to the United States after it ended.

And that is precisely what makes Ronald Read's story so interesting. He never earned a high income, did not build a large company, and never became a well-known public figure. He did not found a technology startup, nor did he hold a senior management position at a large corporation.

Yet over the course of his life, he managed to accumulate wealth worth nearly $8 million. Investing played a major role in building that wealth.

How Did Ronald Read Invest?

As we already know, Ronald was a frugal and thrifty man. But he didn't stop there – he carefully built up savings that he invested over the long term. He built his wealth primarily by buying stocks for decades and holding them for the long term. He was what is known as a buy-and-hold investor: rather than speculating on short-term price movements, he relied mainly on the long-term growth of his investments and the dividends they paid.

His first documented investment dates back to early 1959, when he purchased approximately $2,380 worth of shares in Pacific Gas & Electric. He never sold these shares and held them until his death in 2014. After accounting for stock splits, they were worth approximately $10,735 at the time of his death – so on their own, they certainly did not represent a spectacular return. However, they were just one of the first pieces of a much larger portfolio that he built over more than five decades.

Ronald Read held his stocks for the long term, often for decades. He was not a trader and did not try to profit from short-term price movements. He did not sell simply because stock prices fluctuated or because markets went through a panic-driven sell-off – and over the several decades he invested, he experienced quite a few of them. He was able to ignore short-term fluctuations and wait for the power of time and compound growth to take effect.

There is another aspect of his story that personally caught my attention. He obtained information about the performance of his investments from The Wall Street Journal and information available at the public library. He therefore did not monitor his portfolio every day, let alone several times a day.

And in this respect, today's investors paradoxically have it harder. In the age of the internet and investment apps, there is nothing stopping us from checking the value of our portfolio several times an hour. But this can expose us to greater psychological pressure. We see every decline immediately and tend to analyze, worry about, and react to it, even though from a long-term perspective it may mean very little.

In this respect, Ronald Read had a certain advantage simply because of the era he lived in. He did not have stock prices constantly at his fingertips, so his investment decisions were not exposed to every short-term market movement. This alone certainly does not explain his investment success, but it may have helped him stick to his long-term strategy and avoid reacting to every short-term decline.

How Ronald Read Built $8 Million

Read built an impressive investment portfolio, with consistency, diversification, and a long investment horizon being the key factors. He had more than 50 years to invest, and he made full use of that time. He allowed compound growth to fully take effect without interrupting it. This was the primary engine behind his wealth.

Let's imagine that we invested $100 per month (~CZK 2,200), or $1,200 per year (~CZK 26,400), and achieved an average annual return of 8%. This is not an enormous amount of money that would necessarily be beyond the reach of someone with an average income. For simplicity, we will assume a single $1,200 investment at the beginning of each year. How much would we have at the end? The result is probably surprising to most people.

Compound Interest – $100 per Month at 8% per Year

After fifty years of investing $100 per month, an average annual return of 8% would result in approximately $740,000 (~CZK 16 million). Take a close look at the final column: while our total contributions would amount to just $60,000, investment gains would account for approximately $679,000.

Those are some impressive numbers, aren't they? Our own contributions would make up just 8.1% of the final amount, while the gains generated by investing would account for an incredible 91.9%.

For the sake of fairness, however, we also need to take inflation into account. Fifty years from now, this money will have significantly lower purchasing power. At the same time, this is a highly simplified model – in the real world, we would probably not invest exactly the same amount every month, and we certainly would not achieve precisely an 8% return every single year. Nevertheless, this example does a great job of demonstrating the power of compound growth and, above all, the importance of time.

This illustrative example is still quite far from what Ronald J. Read managed to achieve. He accumulated wealth of around $8 million. So let's try one more example, this time with regular investments of $300 per month (~CZK 6,500). This is already a fairly substantial amount, but it could be realistic with sensible financial management if someone actively looks for room in their budget.

Compound Interest – $300 per Month at 8% per Year

And here we have reached approximately $2.2 million (~CZK 48 million) after fifty years of investing $300 per month at an average annual return of 8%. The ratio between investment gains and our own contributions naturally remains the same (8.1% vs. 91.9%), but the absolute numbers have increased significantly. We are now getting quite close to what Ronald Read managed to achieve – according to available information, he invested for approximately 55 years. As you can see, time, consistency, and persistence can lead to truly substantial sums.

For completeness, I should also add that according to the commonly used 4% rule of thumb, such a portfolio could provide approximately CZK 160,000 per month in withdrawals. This does not, of course, mean that the portfolio will never be depleted – the 4% rule is not a guarantee. It does, however, illustrate the potential of a portfolio built over the long term. And that is already a very respectable income stream that, with the right approach, could potentially serve not only one person but also future generations.

What Can We Learn from Ronald Read's Story?

Ideally, we should start investing as early as possible and make use of the time that fuels compound growth. The longer our investment horizon, the more time we give compound growth to work its magic. Ronald James Read had decades on his side and managed to make full use of them. None of us knows how much time we have ahead of us, which makes postponing investing unnecessarily even less sensible.

The best time to start was yesterday. The second-best time is today.

From a psychological perspective, I recommend investing regularly rather than waiting for the right conditions or the perfect time. That moment may never come, and the human brain is remarkably good at coming up with excuses to convince us that we can simply wait.

Regular investing also helps us turn investing into a habit, one that does not require us to make the same decision over and over again.

We can only invest if we are able to generate a surplus – and this is where lifestyle inflation becomes a critical factor. From our student years onward, most of us gradually see our incomes increase, but unfortunately, many people adjust their lifestyle accordingly. Often repeatedly, leaving them with little or no money left to invest.

"Wealth is what you don't see. Spending money to show people how much money you have is the fastest way to have less of it." 

Morgan Housel, author of The Psychology of Money

Ronald Read did not try to predict which stock would soar the following year, nor did he try to anticipate when the next market rise or decline would come. He bought shares of established companies, held them for the long term, and let time work in his favor. He did not need to know what the market would do next month or next year. He only needed to know that he was investing with a horizon of several decades.

And that may be an important lesson for the ordinary investor. Constantly searching for a "better" stock, trying to time the perfect moment to buy or sell, and reacting to every market movement can lead to more mistakes rather than higher returns. Sometimes, the greatest investment skill is accepting that we cannot consistently predict the market and instead sticking to a simple, long-term strategy.

But ultimately, everyone has to find their own path.

I wish you success on yours!