Author Topic: Janitor amasses a $8 million fortune  (Read 2384 times)

elysianfields

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Janitor amasses a $8 million fortune
« on: January 13, 2023, 03:57:44 AM »
From Yahoo! Finance, so a bit on the click-baity side:

https://finance.yahoo.com/news/janitor-built-8-million-fortune-185251227.html

Chris L

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Re: Janitor amasses a $8 million fortune
« Reply #1 on: January 15, 2023, 09:09:48 PM »
A remarkable story, but a well known one. The janitor in question, Ronald Read, died in 2015, and left a substantial amount of his fortune to his town's public library and a local hospital.
https://www.fool.com/retirement/2020/02/02/the-janitor-who-became-a-multi-millionaire-by-reti.aspx

lifeisshort123

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Re: Janitor amasses a $8 million fortune
« Reply #2 on: May 01, 2023, 06:15:34 PM »
It’s a nice story, with some very good takeaways.  I admire the simplicity he had to his life and the impact he had on his community when he passed away.

That said, I do think there is no harm with enjoying your life a little bit more.

Extramedium

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Re: Janitor amasses a $8 million fortune
« Reply #3 on: May 11, 2023, 01:28:50 PM »
After reading Die with Zero, I can’t help myself thinking that he may have enjoyed seeing that money put to use.

GilesMM

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Re: Janitor amasses a $8 million fortune
« Reply #4 on: May 11, 2023, 03:37:53 PM »
If you save just $10,000 per year in your 20s and leave it alone in an index, you will have $8 million when are you 90, assuming 7% CAGR.

dividendman

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Re: Janitor amasses a $8 million fortune
« Reply #5 on: May 11, 2023, 05:45:38 PM »
If you save just $10,000 per year in your 20s and leave it alone in an index, you will have $8 million when are you 90, assuming 7% CAGR.

Hrm, I get over $17 million (nominal) assuming 70 years compounded annually at 7% with $10k yearly addition...

RWD

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Re: Janitor amasses a $8 million fortune
« Reply #6 on: May 11, 2023, 08:59:25 PM »
If you save just $10,000 per year in your 20s and leave it alone in an index, you will have $8 million when are you 90, assuming 7% CAGR.
Imagine telling someone (a janitor?) circa 1950 to save $10k a year. That's $125k in today's dollars.

Davnasty

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Re: Janitor amasses a $8 million fortune
« Reply #7 on: May 24, 2023, 09:02:09 AM »
If you save just $10,000 per year in your 20s and leave it alone in an index, you will have $8 million when are you 90, assuming 7% CAGR.

Hrm, I get over $17 million (nominal) assuming 70 years compounded annually at 7% with $10k yearly addition...

I think they meant if the contributions were made from 20-30 and nothing was added from 30-90.

Davnasty

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Re: Janitor amasses a $8 million fortune
« Reply #8 on: May 24, 2023, 09:39:43 AM »
If you save just $10,000 per year in your 20s and leave it alone in an index, you will have $8 million when are you 90, assuming 7% CAGR.
Imagine telling someone (a janitor?) circa 1950 to save $10k a year. That's $125k in today's dollars.

That's unrealistic however to be fair they did account for that inflation by using a CAGR of 7%. Maybe a more accurate formula would be save $800/year ($10,000 in today's dollars) from 20-30 and continue compounding at 11.25% CAGR from 30-90. That would give you $9M. Being able to save $800 as a janitor in the 50's might still be a stretch but the math checks out.

Now I'm trying to think of a slightly more realistic scenario for this guy. The article is thin on details but lets say instead he worked from 20-65 adding the $800 increasing by 3.5% every year amd added nothing from 65-90. That would get him up to $19M. Even though I've done lots of compound growth calculations, it still surprises me how little difference the extra 35 years of savings makes.

Then should we account for post retirement spending? If this guy is really so frugal, maybe he's living off social security? In any case I figured 2% spending of his stache after 65 by reducing CAGR to 9.25%. I'm not even sure that makes sense but I'm trying to keep this simple. That drops him down to $12M.

ETA: Using that last formula to hit $8M at age 90 he would've needed to save $9,250 in todays dollars every year. Going back to the articles I see he retired at 76 and died in 2015 but I'm done for now...
« Last Edit: May 24, 2023, 09:49:34 AM by Davnasty »

 

Wow, a phone plan for fifteen bucks!