Anne Scheiber worked as an auditor in the grass-roots tax department in the United States. In 1944, at the age of 51, she retired and began to focus on managing her own investment portfolio until the last 51 years of her life.
Anne died at the age of 101. Her dividend stock portfolio was worth more than 22 million dollars, generating more than 750,000 dollars of dividend income each year. It can be said that she is one of the most successful dividend investors of all time.
This story is an inspiration for many investors. Her experience shows how to achieve financial freedom through the following steps and thus shape the lifestyle one desires:
Anne’s father died due to losses in real estate investment, and she was brought up by her mother since childhood. She started working in the accounting department at the age of 15 and entered the Internal Revenue Service after the age of 27. At that time, American families were more inclined to provide higher education for their children, which meant that Anne had to persevere and pay for school by herself. She invested in herself, graduated from night school, and finally passed the bar examination.
Although her work performance was extremely excellent, she realized that as a Jewish woman, she would not make much progress in the workplace. Due to racial and gender discrimination at that time, she worked at the Internal Revenue Service for 23 years without ever getting a raise or a promotion, and her annual salary never exceeded $3,150. She had a hard life all her life and had to make a living on her own, which might have led her to decide that the best way to achieve success in this world was through investment.
She knew decades before her death that her savings should be used for charitable causes. “She said, ‘One day, long after I’m gone, there will be some women who don’t have to make a living on their own.'”
Anne may not have had a high salary or received a promotion, but she learned a lot from her work. For example, by looking at tax returns, she learned that wealthy people tend to invest in appreciating assets such as dividend-paying stocks, rental-paying real estate, and businesses that generate income for their owners. It was this epiphany moment that inspired Anne to accumulate wealth through blue-chip stock investments. The conclusion she drew from carefully studying other people’s tax returns: the surest way to get rich in America is to invest in stocks.
According to some reports, the value of her investment portfolio at the time of her retirement was $5,000. Other reports mentioned that from old tax returns in the 1930s, it can be seen that her annual dividend income at that time was $900, and this number also increased over time.
It is presumed that her investment portfolio at the time of her retirement in 1944 might have been close to $18,000 – $20,000, meaning the dividend rate was about 4.50% – 5%. Nevertheless, she left a huge inheritance of $22 million at the time of her death, and all this initial capital came from her savings during her long career, when very few Americans owned stocks.
Even more impressive is that she once suffered losses in stock market investments because the brokerage firm went bankrupt in the 1930s and her funds disappeared along with it, and there was no SIPC insurance protection at that time. However, Anne picked herself up and continued her investment career.
Just as described in “Money Magazine”:
“At the height of the Great Depression, Anne, who was 38 years old and had an annual income of just over $3,000, invested a large part of her life savings in stocks. She entrusted her money to Bernard, the youngest of her four brothers, who had started working as a broker on Wall Street at the age of 22. In 1933 and 1934, the market went up and he did a good job of picking stocks for Anne. But the securities firm where he worked suddenly went bankrupt and Anne lost all her money.”
According to her lawyer, her savings rate was extremely high, enabling her to accumulate the initial funds to build her own investment capital. She saved about 80% of her salary, which is quite impressive.
Buy stocks in industries that you understand.
Anne’s life was not perfect. She was solely focused on making money and had few interests other than investing.
But to be fair, she made the most of these interests.She loved movies, so she read the “Variety” magazine carefully to learn more about the best-performing entertainment companies. This led her to invest in top companies such as Loews, Columbia, Paramount, and Capital Cities/ABC.
As Anne grew older, she learned a lot about the pharmaceutical industry through the subtle influence in her daily life. In addition to Schering-Plough, she also invested in Pfizer and Bristol-Myers Squibb. Anne’s biggest investment move was buying 1,000 shares of the pharmaceutical company Schering-Plough in 1950. Due to stock splits and dividend reinvestment, she eventually held 128,000 shares worth $7.5 million.
Her largest positions in 1995 were as follows:
Like Buffett, Anne was also a long-term investor in Coca-Cola. She didn’t know how the “newcomer” Pepsi-Cola would develop until she tasted it. “When Pepsi-Cola came out, she tried it and then bought it when Pepsi-Cola was still a new brand.”
In some circles, the investment philosophy of “buy what you know” has been criticized – but this is mainly based on a misunderstanding.
“Buy what you know” doesn’t mean that you should blindly buy stocks of your favorite companies without doing any research or due diligence. Instead, use familiar companies and products as the starting point of your investment philosophy.
Anne deeply understood the difference. Although she was a movie fan, she didn’t buy stocks of every movie company. Instead, she selected the best companies in Hollywood through research and investigation.
The buy-and-hold investment strategy is not for the faint of heart. Especially during economic downturns, you will be severely tested, and in a frenzied bull market, you will be bombarded by FOMO (fear of missing out). But if you let your wealth snowball, everything will be okay. In fact, it’s much better than just okay.
Anne firmly adhered to this. Instead of using her brokerage account, she let the dividends be reinvested and compounded. William Fay said, “During the long bear market in the 1970s, many of her pharmaceutical stocks fell, some even by 50%, but she persevered because she believed in these stocks. She also didn’t panic during the stock market crash in 1987. She thought the whole market was overvalued and she believed these stocks would rebound.”
Letting winners run for several consecutive years is what distinguishes good investors from losing investors. Few people today have the patience or perseverance to hold stocks for months, let alone decades. Many times, stocks seem to be treading water, causing investors to sell before a significant rally. But by learning from Anne’s investment case, you won’t make such mistakes. By becoming a patient long-term investor, one can make good use of a diversified portfolio and make oneself one of the few winners in the market.
Let the magic of compound interest work.
It is presumed that her funds have been compounded at a compound annual growth rate of about 14% – 15% for a long time. When you compound for a long time at a relatively high rate of return, the initial amount of your funds is really insignificant compared to the final amount.
Suppose we start from 1944 and compound $20,000 at a compound growth rate of 15% for 50 years. At the same time, assume that her investment portfolio has generated a fixed 3% return (for illustrative purposes only). In reality, her dividend yield in the early 1940s was close to 4% – 5%, and it dropped to 2% – 3% in the 1990s. She did reinvest dividends into municipal bonds starting from the 1980s, but this is not taken into account in the calculation because it is only used to illustrate the nature of compounded returns. The following is a summary of compounding:
- This means that she had $20,000 in 1944 and earned an annual dividend income of $600.
- Her investment portfolio grew to $80,900 by 1954 and earned an annual dividend income of $2,427.
- Her investment portfolio was worth $327,330 by 1964 and earned an annual dividend income of $9,820.
- Her investment portfolio grew to $1,324,000 by 1974 and generated an annual income of $39,700.
- By 1984, her investment portfolio was worth $5,357,000, generating $160,700 in dividends annually.
- By 1994/1995, her investment portfolio reached a value of $22,000,000, generating $750,000 in dividends annually.
So, if we assume that she started investing with $20,000 in 1944, Anne might have generated approximately $1,000 in annual dividend income. If she was indeed able to save 80% of her $3,150 salary in 1944, then this dividend income would have been sufficient to support her life. But this also means that she had to live a frugal life to survive. We’re not sure if she had purchased a pension or other security items, but by comparison, this might have been just a small sum out of reach.
To put things in perspective, Buffett was worth approximately $400 million at the age of 52. By the age of 90, his net worth was $78.4 billion. He did have a lot of money at the age of 52 and compounded it at a very high rate of return for nearly 40 years.
Anne’s insight is that in the United States, holding stocks is the easiest way to get rich, which is widely supported by extensive research and data that can be obtained today. In the past, there was very little research on the advantages of equity ownership, and such research was not as popular as it is today.
If you invested $1 in the U.S. stock market in 1802 and compounded it at an annualized return rate of 8.10% for 211 years, by 2013 you would have $13.5 million. If someone had invested a small sum in stocks that long ago and never spent it, they would be extremely wealthy. Or rather, their descendants would be extremely wealthy.
Money can’t buy love.
Anne was not a happy person. She pursued wealth not to get rid of the shackles of debt or to travel around the world after retirement, but for a strong “revenge” on those who she thought had wronged her.
These included her parents, the brother who once lost all her money, and the IRS that never promoted her. Anne may not have been treated fairly for some or all of the above reasons, but she let pain and resentment isolate her so much that there was nothing in her life except watching the balance of her investment portfolio increase.
People magazine, a news media known for its incisiveness, once described her like this:
“Only a few people knew Anne Scheiber, and few remembered seeing her smile. They only remembered her as a woman with no friends and morbidly frugal, who seemed as bitter as Baker’s chocolate.”
Even the people who knew Anne best had little good to say about her. William Fay, her stockbroker at Merrill Lynch, said, “To some extent, a recluse like her must get some spiritual reward to continue like this, but for you and me, her life was very bad. The most important day for her was to go to the Merrill Lynch vault near Wall Street to check her stock certificates. She did this often.”
Anne was extremely frugal – she cut her expenses to the bare minimum and chose to live alone in a small one-bedroom apartment in Manhattan. William Fay said, “She was basically an unhappy person, completely occupied by her securities account and money.”
Never forget that your investments should serve you and make your life better. Frugality is good – in moderation – but one day you will sit down and enjoy the fruits of your labor. Delaying gratification doesn’t mean no gratification at all.
Anne’s story has a happy ending: Anne’s redemption was not achieved during her lifetime, but selflessly in her will, she bequeathed her entire $22 million fortune to Yeshiva University. She hoped that this gift (in the form of scholarships and financial aid) would provide Jewish female students with more educational and employment opportunities than she herself had enjoyed.
Reproduction Notes：InvestFancy » Anne Scheiber:Increased 4400 Times in 50 Years