Let me ask you a simple question. How much wealth a person, who has worked for 43 years as a secretary all his/her life, can create? The condition is that all the wealth is created out of his/her own earnings and not any gift or inheritance or speculation. Don’t have an answer? Read below to know more.
Here is a real story of Grace Groner, who in her 43 years career as a secretary in Abbott Laboratories created remarkable wealth. Besides helping her sustain – her life her way, she was able to create a foundation of over seven million dollars for her college. (Read the whole story here: https://en.wikipedia.org/wiki/Grace_Groner)
This seems to be too much wealth for an average working woman!!!
How she did it? What was her financial acumen? How well she was able to play the market cycles? There were many questions like this in my mind when I started exploring the details on the internet and the following are my observations:
- Grace made her first investment in 3 shares of Abbott Laboratories and for the next 75 years (she lived till the age of 100) she held on to the stock and kept on reinvesting all the dividends back in the stock.
- Fortunately, the company Grace invested (Abbott Laboratories) did well helping her create enormous wealth for herself. However, no one can take away the credit of staying invested for seventy-five long years despite being witness to many recessions, market corrections, and wars.
- It is said in one of the articles, that her investment yielded a return of 15.2% over the period of her investment. Compounding along with the returns, it was the longevity of her investment which helped her amass this quantum of wealth.
So, what lessons can we learn and implement in our financial life:
- High returns compounded with time in the market helps in creating a fortune. Grace Groner’s story is one example. There will be many such examples we can discuss. Hence, we can confidently infer, this was not by fluke.
- It is said that if you make average returns with lesser mistakes, you will make more wealth as compared to the person making more mistakes in search of higher returns.
- Common sense in investing world can make wonders and Grace’s investment story personifies this statement. The Majority of people lose because they try too hard and want to capture every possible movement of the market and in the bargain, lose the precious role of common sense in investing.
- Prudent Investing from an early age can be the biggest differentiating factor. Grace invested in one quality stock in her twenties and stayed invested for around 75 years. Creating a lean portfolio of quality stocks and staying invested for a longer time frame will yield amazing results in long term.
- A small quality investment held for a longer time horizon can help in creating desired wealth. We always question how a small amount will make a difference to our financial status. In my opinion, Grace’s story provides the answer.
On this financial literacy day, I am sharing this story to prompt the women readers to think and act like Grace Groner and do a bit for themselves. The good part is that to start the wealth creation journey you do not need a strong financial IQ. You just need the willingness, apply common sense and stay put with the simple yet effective long-term investment strategy.
Maybe the next woman having a remarkable investment journey will be you!
Happy Financial Literacy Week 2021
Living a meaningful life 