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Turn $200 into $7 million

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A client shared this story with me last week: In 1935 Grace Groner purchased three shares of company stock in Abbott Labs. 75 years later, thanks to the power of compound interest, her three share purchase was worth $7 million.

Grace Groner lived nearly her entire life in Lake Forest, Illinois, about 45 minutes north of Chicago.

After graduating from Lake Forest College in 1931, Grace was hired as a secretary at Abbott Laboratories, where she worked for more than four decades.

Grace never earned an amazing salary as a secretary. According to the Los Angeles Times, she got her clothes from garage sales. She lived in a one-bedroom house that was willed to her when a friend passed.

But in 1935, a few years after she started her job at Abbott Labs, she bought three shares of the company’s stock for about $60 per share. Her total investment was under $200.

Grace never sold those shares. Through dividends, share splits, and dividend reinvestment, when she died in 2010, her three share purchase was worth $7 million. She left it all to her alma mater.

The two most important lessons from this story?

A) She started with $200.

B) She took advantage of the power of compounding — for 75 years!

Compounding is often referred to as “magic” because it is one of the most fundamental ways to build wealth, yet takes the least amount of effort.

Compounding is simply earning interest on interest or dividends on dividends.

compound intereset

 

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E.J. Smith

Editor-in-Chief
E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zilldjians. He grew-up worshiping Neil Peart of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris. Please get in touch with E.J. at ejsmith@youngresearch.com.