The world’s greatest investors: Anne Scheiber
After suffering big losses in the 1930s due to poor advice from her stockbroker, Anne Scheiber took direct control of her investments.
Anne Scheiber, who was born in 1893, studied at secretarial school before working as a bookkeeper. She later graduated from George Washington University with a degree in law.
In 1924 she took a low-level auditing job at the Internal Revenue Service, retiring in 1944. Over the next 51 years she lived an anonymous life in a rent-controlled apartment in New York. When she died in 1995 she made headlines by leaving an estate valued at $22m to Yeshiva University in New York.
What was her strategy?
After suffering big losses in the 1930s due to poor advice from her stockbroker, she took direct control of her investments, opening a Merrill Lynch account in 1944 with $5,000 in savings. She put the financial skills she had gained as an auditor to work, buying the industrial companies and blue-chip shares she thought best placed to prosper. She was a "buy and hold" investor, rarely selling her stocks and reinvesting the dividends. She was also frugal, wearing clothes that were decades old.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Did this work?
Growing $5,000 into $22m implies an annual rate of return of 17.9%, far higher than the stockmarket over this period, which only returned 12.35%. She also received a government pension of around $3,100, a large portion of which she managed to save, thanks to her lifestyle. Her executor thinks that in 1936 her portfolio was worth around $21,000.
This works out at a return of around 12.6% still impressive, given that she shifted a large amount of her investments into municipal bonds in the late 1970s (which would be expected to have lower returns) and that she had to pay taxes on any stock dividends.
What were her biggest successes?
In 1950 Scheiber bought 1,000 shares in Schering-Plough for around $10,000. By 1995 the capital value of the stock had risen to $7.5m, a return of around 15.9% a year for Scheiber. Another big winner was Coca-Cola. Even excluding dividends, the price of the shares alone grew by 26 times from $28,000 to $720,000 between 1980 and 1995, a return of 24% a year.
What lessons are there for investors?
Scheiber's story demonstrates the value of sensible long-term investing. She also shows that you don't necessarily have to have a lot of money when you start out to accumulate a small fortune. Being frugal (though you might not need to be as austere as she was), reinvesting your dividends and avoiding overpriced shares vastly increases your chances of ending up very wealthy.
Scheiber had an advantage in that she lived a long time. To increase your chances of amassing wealth, it makes sense to start your saving as early in life as possible.
Sign up to Money Morning
Our team, led by award winning editors, is dedicated to delivering you the top news, analysis, and guides to help you manage your money, grow your investments and build wealth.
Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.
He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.
Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.
As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.
Follow Matthew on Twitter: @DrMatthewPartri
-
8 of the best houses for sale with libraries
This week: the best houses for sale with libraries – from a five-storey Georgian townhouse in Bloomsbury, London, to a 15th-century property with a library in a medieval tower in Lozère, France
By Natasha Langan Published
-
Investors pull money from UK equities as government warns of “painful” Budget
The government’s post-election honeymoon period has been short-lived, and investors are shying away from UK equities as a result
By Katie Williams Published