Ronald Wayne vs. My Daughter

Without immediately searching the name “Ronald Wayne,” do you know who he is or what he did? Most people haven’t a clue, and that’s for a good reason. He isn’t rich, he isn’t an actor, and he’s probably not a family member of yours. So, who is Ronald Wayne?

Ronald Wayne is a co-founder of Apple Inc. He was initially allocated a 10% share of the company in 1976. Apple’s value (based on market capitalization) today is around $2.46T, putting Ronald Wayne’s potential net worth at $246,000,000,000. But Ronald doesn’t have that money. Ronald isn’t rich. Ronald isn’t known to have any substantial amount of money today. In fact, according to multiple sources, Ronald lives in a mobile home park in Pahrump, Nevada where he waits for his social security check to arrive each month.

How does one go from owning 10% of the world’s most valuable company to living on social security income checks? In short (very short answer), he sold his shares too early due his averseness to taking risk. He sold his shares back to Steve Jobs and Steve Wozniak for a total of $800 in 1976. He did this because he had already experienced loss through other endeavors, didn’t want to experience that loss again, and believed that the prudent move would be to take what he could get as soon as he could. Here’s the link:

I bring up this story as it resonates with something close to home, something someone in my own family just did: My 16-year-old just opened and funded a Roth IRA! Since she now has a job and will be in a very low tax bracket, we discussed how her systematic monthly contributions combined with 50-plus years of savings could put her in a great financial position upon retirement. And for those that think getting a 16-year old to part with their hard-earned money is easy, think again! Unlike the knee-jerk move that Mr. Wayne took by redeeming his 10% stake in Apple Inc. only a few weeks after acquiring them, my daughter will let the power of time and compounding interest do its job, and to not worry about it.

Compounding interest, whereas accumulated interest gains interest (money) on itself, produces exceptional results over very long periods of time. Whereas Ronald Wayne sold out his shares only 12-days after agreeing to take a stake in Apple Inc., my daughter has plans to hold and continue funding her investments until she retires 50-60 years from now. And unlike Ronald who received his immediate share value of $800, my daughter will most likely enjoy a 7-figure account…most which will increase due to compounding interest over her very long investment period.

If you’d like to review a plan that takes the long view of investing, ignores the noise and distractions of temporary declines, and could potentially provide a big reward you can benefit from, give our office a call. And if you have a child who is looking to fund his or her own account with job earnings, give me a call for that as well. I’ll be sure to provide advice to help guide them in the right direction.