The Motley Fool

Things I’ve learnt from my millionaire grandfather

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

My grandfather passed away last year at the grand old age of 95. He has left behind quite some estate, we are now finding out. His stock investments alone are worth millions of pounds.

While that’s not unheard of, what’s remarkable about my grandfather’s story is that he never had a high-flying job, or earnt a huge salary. In fact, he spent much of his career in the British Army. So how on earth did he accumulate such wealth? And what can we learn from his story?

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

His investment strategy

It’s becoming clear that much of my grandfather’s wealth was generated from the stock market. Living in Australia in the 1980s, he had the foresight to invest in the four largest Australian banks when they were floated on the stock market in the 1980s and early 1990s. These investments have paid off handsomely.

An A$2,000 investment in the Commonwealth Bank of Australia when it floated in 1991, is now worth around A$130,000 if dividends were reinvested. Given that my grandfather invested around A$50,000 across four banks and a handful of blue-chip mining companies such as BHP Billiton and Rio Tinto, his portfolio has done very well.

The lessons

So what can we learn from this? Well for starters, it’s worth pointing out that he took a risk. He had no idea how these bank shares would perform over the long term. Yet he took the risk and was rewarded. That’s an important point. It’s hard to achieve millionaire status by investing in cash. To generate long-term wealth, whether it’s from stocks, property or businesses, you have to take a degree of risk.

Second, a key takeaway here is that investing doesn’t need to be complicated. All my grandfather did was buy blue-chip companies and hold them for 30 years. He didn’t trade much, preferring to spend his time playing golf rather than looking at his investments. He didn’t buy speculative companies or use derivatives. He kept things very simple, with a blue-chip buy-and-hold strategy. Time in the market and the power of compounding did the rest.

Now you could argue that he got lucky. And I’d agree to an extent. He was in the right place at the right time participating in those IPOs. It’s not often that you get to pick up some of the largest banking stocks in the country for peanuts. Or is it? That got me thinking.

The Global Financial Crisis and Brexit have depressed UK banking stocks massively over the last decade. Lloyds Banking Group shares cost just 68p right now while Barclays trades at 205p. Are these low share prices an incredible opportunity for long-term investors? Could UK banking stocks make investors wealthy over a 30-year time horizon? Obviously, no one knows for sure. But my grandfather didn’t know how things would pan out either when he invested in the 1980s.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic…

And with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be daunting prospect during such unprecedented times.

Fortunately, The Motley Fool is here to help: our UK Chief Investment Officer and his analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global lock-down…

You see, here at The Motley Fool we don’t believe “over-trading” is the right path to financial freedom in retirement; instead, we advocate buying and holding (for AT LEAST three to five years) 15 or more quality companies, with shareholder-focused management teams at the helm.

That’s why we’re sharing the names of all five of these companies in a special investing report that you can download today for FREE. If you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio, and that you can consider building a position in all five right away.

Click here to claim your free copy of this special investing report now!

Edward Sheldon owns shares in Lloyds Banking Group. The Motley Fool UK has recommended Barclays and Lloyds Banking Group. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.