How a Secretary Made and Gave Away $7 Million

She lived in a tiny one-bedroom cottage in Lake Forest, Ill.

She bought her clothes at rummage sales, didn’t own a car and worked most of her life as a secretary for a pharmaceutical company.

Yet after her death at age 100, Grace Groner left Lake Forest College a gift of $7 million to be used for scholarships. The money came from three shares of stock she bought — and held on to — in 1935.

“She did not have the (material) needs that other people have,” William Marlatt, her attorney and longtime friend told the Chicago Tribune. “She could have lived in any house in Lake Forest but she chose not to….She enjoyed other people, and every friend she had was a friend for who she was. They weren’t friends for what she had.”

Ms. Groner’s story might seem like a classic Millionaire Next Door fairy tale — the thrifty, conservative, hard-working saver who hoards pennies over a lifetime to accumulate vast wealth. And that is certainly part of the story. Aside from occasional trips, Ms. Groner was rigorously frugal due to her Depression-era upbringing. (Not having a husband or children may have also helped her savings rate.)

Yet the way Ms. Groner garnered her wealth was, in fact, more like one big, lucky gamble than a lifetime of scrimping and saving.

Ms. Groner worked for 43 years as a secretary for Abbott Laboratories. In 1935, she bought three specially issued shares of Abbott for $180. She never sold a share, even after repeated stock splits. She also kept reinvesting the dividends. By the time of her death, she owned more than 100,000 shares valued at about $7 million.

As David Roeder of the Chicago Sun-Times points out: “It is a grave error to put your nest egg behind a single company, and it is worse when the company is your employer. Groner had a winner, but others have done this with Enron, General Motors or Bear Stearns.”

The all-in-one basket strategy was, of course, a grave error for employees of Enron and others. And financial advisers love to herald diversification, which didn’t turn out so well for many investors during the financial crisis.

But Ms. Groner’s story shows that savings alone probably doesn’t get you to $7 million. It seems that loading up on a one single investment and getting tremendously lucky over a long period of time can get you there. But don’t count on it.