Hi there,

Welcome back to Finance Friday! Last week, we talked about why investing is important, especially when it comes to protecting your money from debasement and inflation. This week, we'll meet an inspiring investor who achieved great results with a surprisingly simple approach.

Finance Friday: The Simple Investor's Success Story

A Great Investor that You’ve Never Heard of!

When it comes to the world's best investors, names like Warren Buffett and George Soros often come up. But today, we're focusing on someone less well-known: Ronald Read.

Who was Ronald Read?

Born in 1921 to a Vermont farming family, Ronald didn't have a privileged upbringing. He served in World War II and later worked as a petrol station attendant, mechanic, and even a department store janitor. Despite his modest jobs, Ronald demonstrated remarkable financial discipline with a surprisingly simple approach. Ronald said that he had two passions: chopping wood and investing!

Investing for the Long Term

Ronald lived frugally, but he also invested wisely. He focused on buying shares (ownership units) in companies he understood and that paid dividends (regular cash payments to shareholders). He bought well established and reputable companies in different sectors such as healthcare, telecommunications, utilities, transport, consumer good and banking. Although he was a shareholder of Lehmann Brothers when it went bankrupt in 2008, being diversified meant that the negative impact on his portfolio was minimal. He followed a buy-and-hold strategy, meaning he kept his investments for a long time and reinvested the dividend income he received.

A Legacy of Success

When Ronald passed away in 2014, at the age of 92, his family was shocked to learn his estate was worth a staggering $8 million! They had no idea he'd been so successful.

Lessons from Ronald Read's Story

Ronald's story offers valuable takeaways for aspiring investors:

• Wealth isn't a requirement: You don't need a high-paying job to build a healthy investment portfolio.

• Expertise isn't essential: While financial knowledge is helpful, it's not necessary to be a financial expert.

• Live frugally: Spend less than you earn. Ronald took frugality to an extreme, but the principle holds true.

• Diversify: Hold stocks in different sectors

• Time is your friend: The longer your money is invested, the more it can grow. Start investing as soon as you can!

In next week’s newsletter, we will discuss how you can build a diversified portfolio even more easily than Ronald Read did.

Glossary of Terms

• Frugal: Practicing careful budgeting and avoiding unnecessary spending. For example ‘a frugal lifestyle’.

• Shares (also called Stocks or Equities): Units of ownership in a company.

• Dividend: A regular cash payment made by a company to its shareholders.

• Buy-and-hold strategy: An investment approach where you buy shares and hold them for a long time, rather than frequently buying and selling.

Bitcoin Halving

A couple of weeks ago we talked about the Bitcoin halving which takes place tomorrow, April 20th. This is when the reward for Bitcoin miners will be cut in half.

What to Expect?

Previous Bitcoin halvings have not produced an immediate price increase for Bitcoin and, in the short term, the price might even dip. However, the long-term outlook appears positive. Historically, a reduction in supply has been bullish (positive) for Bitcoin, with new price peaks occurring within 18 months of previous halvings.

Price Predictions

Please note that these newsletters do not offer specific price predictions and certainly do not offer financial advice. However, Bitcoin enthusiasts are optimistic for this cycle, predicting prices potentially reaching 2-8 times the current price of around $60,000. This translates to a range of $120,000 to $480,000.

On the other hand, Goldman Sachs warned investors not to extrapolate Bitcoin price action from past cycles:

"Historically, the previous three halvings have been accompanied by BTC price appreciation after the halving, although the time it took to reach the all-time highs differs significantly. Caution should be taken against extrapolating the past cycles and the impact of halving, given the respective prevailing macro conditions," Goldman's Fixed Income, Currencies and Commodities (FICC) and Equities team said in a note to clients on April 12.

As always with the financial markets - time will tell!

Do you have any Business English questions?

Please email me and I will do my best to answer them in future newsletters.

Until Monday - have a great weekend!

Iain.

www.communicateenglish.com

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