I love reading stories about how ordinary people became millionaires via investing in the stock market. This i why I started a series on the secret dividend millionaires club. Today, I introduce to you Donald and Mildred Othmer. Two Omaha natives who had a fortune of close to £800,000 million upon their deaths.
Donald and Mildred Othmer were born in the first decade of the 20th century. Both were teachers and called Omaha, Nebraska their home – famous for also being the home of Warren Buffet.
Donald and Mildred in fact knew the young Warren Buffet well. They had faith in the young mans investment acumen. So they both invested $25,000 each into an investment partnership run by Buffet. This one decision changed their lives.
We all know how Buffet compounded the partnerships money from there on. Buffet was able to multiply the Othmer’s wealth by over 12 times within a decade.
When Buffett closed the partnership and gave the option of either pulling out the money or converting into Berkshire Hathaway stock, the Othmer’s opted for latter. They got around 14,500 shares at $42 a share.
In 1995 when they both passed away, the $50,000 investment has become whopping $800 million.
And like most of the people profiled in this series the Othmer’s requested their wealth for charitable causes.
Donald’s bequest of $190 million to the polytechnic where he worked for nearly 6 decades. This was about four times the institute’s entire endowment there.
The couple also donated money to other worthy causes such as the Long Island College hospital in Brooklyn and University of Nebraska-Lincoln, from where both of them graduated.
The story of Donald and Mildred Illustrates that need to invest for the long haul. The couple held on to their investments for close to four decades. And in doing so they did the hardest thing when it comes to investing – doing nothing.
During their holding period, shares in Berkshire Hathaway dropped 59.1% in January 1975 and 37.1% in October 1987. They did not panic and sell. Instead they did nothing.
By doing nothing and not trying to time the market nor tinkering with their portfolios, their money was allowed to compound uninterrupted year after year. This is what lead to their immense wealth.
As at the time of writing this, had that $50,000 investment of 14,500 shares continued in Berkshire, it would be worth more than $4.2 billion. Simply incredible!
You might argue that the money was due to Buffett’s skill rather than anything else. But had they invested in a plain simple index, they would undoubtedly still have become millionaires.
Be it index or actively managed funds or a portfolio of quality companies , what is important is not to get swayed by short term movements, hold for long term and staying the course with patience and discipline.
So stay the course, have patience, and you to can be able to compound your money over the decades.