Jack MacDonald was a frugal attorney who wanted to build a big net worth to give to charity. He went a little far for my taste – having holes in his clothes so he could put more money to work to give to charity whereas I’m never going to give up the custom made dress shirts – but in the end, by studying stocks, he was able to amass a $188,000,000+ fortune that was just revealed when the charitable trusts he had setup to distribute the funds upon his death began writing large checks to educational and humanitarian institutions.
My favorite quote, and one with which I can identify:
“His hobby was the stock market,” it continues, “and he delighted in watching his trust increase in value to benefit local charities.”
I know it’s not a surprise to this audience given the data from the Federal Reserve and Census Bureau but a lot of people still seem shocked how common this is. Most millionaires opt for stealth wealth. Their friends don’t know, their coworkers don’t know, their extended family doesn’t know. In a few cases, not even their children know! Wealth is accumulated through habits; at least in a free society like ours. At the moment, something like 1 out of 25 households falls into the millionaire category, most of it self-made.
In this case, MacDonald’s secret is due in no small part to his age. At 98 years old, that’s a heck of a lot of compounding. You already know that average rates of return in equities (assuming historical mean valuation) results in a roughly 1,083% increase every 25 years, and this was a guy who had more than three-quarters of a century of investing under his belt since reaching adulthood, or 3 of those periods. Had he just parked $1,000 in a basket of equities when he turned 18, it would have been worth $2,048,400 at his death. And, though I can’t prove it without further data, reading his biography, I’m guessing he was doing much better than average.
My case study files of people like this are one of my favorite things in the world. They make me happy, especially since almost all end up giving the money to charity; it seems to be a common motivation. I understand it. I didn’t even own my first house yet when I had already setup my charitable foundation. It’s fun to watch it grow. It’s fun to treat it like a game of Monopoly where the by-product is you get to make the world a better place.
As luck would have it, I was writing about this phenomenon tonight on the About.com site dealing with penny stocks, when I penned this in a passage dealing with other secret millionaires, “Perfectly ordinary people doing perfectly ordinary work have grown very wealthy with this formula; folks like secretary Grace Groner, retired IRS agent Anne Scheiber, science fiction writer Hayford Peirce, twins Robert and Kathleen Magowan, and elderly Californian Agnes Plumb. Curt Degerman used this approach to leave a seven-figure estate he built by recycling spare bottles and cans then investing the small change he was paid.”
You can read the entire story here at the New York Daily News site.