Cooler than Warren Buffett: how a former tax employee turned $5000 into $22 million

During her 23-year career with the Internal Revenue Service, Ann Scheiber never made more than $4 a year and never received a promotion, but by the time of her death at age 101, she had amassed a fortune of more than $20 million. it was successful, the publication said Yahoo!.

Photo: IStock

Scheiber retired at age 51 in 1944 with just $5 in savings.

Over the next five decades, she turned that money into a portfolio of carefully selected stocks, moving from her unremarkable first career to a stunningly successful second.

“You think Warren Buffett is good at this kind of stuff? her lawyer Ben Clark asked suggestively in an interview with The New York Times after her death in 1995. “She’s cooler than Warren Buffett.”

Was extremely thrifty

Even as she grew her considerable fortune, Scheiber maintained a frugal lifestyle, preferring to live only on a small IRS pension and Social Security, said her broker, William Fay.

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She wore the same black hat and coat every day, summer and winter, and regularly walked to work to save on bus fare.

“She saved at least 80% of her salary,” Clark said, noting that he believed Scheiber spent no more than $2 a week on food. “In those days, you could get a hot dog for 15 cents at Nedick's, but I know she found an even cheaper place.”

Although Scheiber often went to extremes to save money, she clearly wanted to spend much less than she earned, which left her with enough money to fill her portfolio.

Invested in what I knew and for the long term

Many experts (like Buffett himself) recommend investing in what you know, which is exactly what Scheiber did. Her portfolio included PepsiCo and Chrysler, pharmaceutical brands Pfizer and Bristol-Myers, and, for her love of cinema, entertainment companies Columbia and Paramount.

To stay up to date, she attended these companies' shareholder meetings—with a free lunch bag in hand, of course.

Like Buffett, Scheiber was a patient, long-term investor, reinvesting her dividends and interest and rarely selling her shares, even when they were in the balance.

“Ann was never looking for a quick buck,” Fay emphasized. “Her whole idea was to achieve long-term effectiveness. She believed that the stock price would rise over the long term.”

Scheiber could have even made even more money if she had started her investing journey at an earlier age. The longer you invest, the more likely you are to earn higher returns due to the compounding effect.

Became an effective tax investor

As a former employee of the tax agency, Scheiber found ways to avoid paying them more than necessary. She held onto her shares rather than selling them, allowing her to avoid capital gains taxes. And because she reportedly hated paying commissions, she later transferred some of her dividends into tax-free bonds.

There are other ways to make investing more tax-efficient, such as investing through a Roth IRA, which is taxed in advance, meaning any withdrawals you make in retirement will be tax-free.

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Conveniently, Scheiber always planned to leave her money for her education, which, as a charitable donation, ultimately reduced the tax burden of her inheritance.

Yeshiva University, the private Orthodox Jewish university in New York to which she bequeathed much of her fortune, still honors her contributions by providing the Anne Scheiber Scholarship for financially and academically worthy Jewish women studying at Stern Women's College and the Alberta College of Medicine. Einstein.

“Ann took great satisfaction in knowing that she was leaving this money,” Clark said. She said: “Someday, when I am no longer alive, there will be women who will not have to worry about their education finances.”

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