Earl Crawley, fondly known as “Mr. Earl,” spent 44 years working as a parking lot attendant in Baltimore, earning no more than US$12 (C$17) an hour or US$20,000 (C$28,000) a year. Yet, against all odds, he built an investment portfolio worth US$500,000 (C$700,000).
Crawley’s extraordinary story caught the attention of the PBS show MoneyTrack back in 2007, where he shared his philosophy: “Stop working so hard and let the money work for you.”
His secret? A simple but powerful strategy: Crawley invested in shares of dividend-paying companies, such as Coca-Cola. And rather than spending the dividends, he reinvested them, allowing his investments to grow over time.
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“Instead of taking the dividends and parking it, let it reinvest itself and increase my shares. The more shares I had, the more dividends I had, eventually the more money I have down the road,” he explained.
Crawley was able to accomplish this feat thanks to his sharp listening skills, which he’d honed in childhood.
“In school I was considered a slow learner — dyslexic, it’s called now. My true gift from God is my ability to listen, and that’s how I’m able to ask questions and use tips from the brokers, financial planners and bank customers I see every day,” he said.
Nickels and dimes
Without a high-paying job, and with a family to support, Crawley couldn’t make large investments. So, he started small and stayed disciplined with his budgeting.
“I did it with good old-fashioned nickels and dimes. My mother taught me how to budget, which made me appreciate how a little money can grow,” he said.
Crawley explained that he also saved whatever he could from the occasional side hustle, such as mowing lawns and washing windows — all on top of his day job.
Dividend investing has long been a strategy embraced by investors both large and small. Even legendary investor Warren Buffett recognizes its potential: Buffett’s company Berkshire Hathaway collects over US$700 million (C$980 million) annually in dividends from Coca-Cola — one of Crawley’s favourite dividend-paying stocks.
And if the dividends are reinvested, they can harness the power of compounding, creating a snowball effect: Each dividend payment buys more shares, which in turn produces even more dividends. Over time, this cycle can significantly amplify the growth of a portfolio, transforming small, consistent contributions into substantial wealth.
If picking individual stocks isn’t your preference, consider a simpler, tried-and-true strategy championed by Warren Buffett: S&P 500 index fund investments.
“In my view, for most people, the best thing to do is own the S&P 500 index fund,” Buffett famously stated. This straightforward approach gives investors exposure to 500 of America’s largest companies across various industries, providing diversified exposure without the need for constant monitoring or active trading.
Buffett believes so strongly in this strategy that he has instructed 90% of his wife’s inheritance be invested in “a very low-cost S&P 500 index fund” after he dies.
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Another path from rags to riches
Stocks aren’t the only asset class that has propelled everyday citizens to wealth — real estate has long been another powerful tool for building financial success.
Like dividend stocks, real estate offers opportunities to generate consistent cash flow through rental income while building equity over time through property appreciation.
It’s also a space where inspiring rags-to-riches stories emerge. Take real estate mogul and YouTube personality Ben Mallah, for example.
Raised in the projects of Queens, New York, Mallah started investing in properties in “the tough neighborhoods of Oakland” that others avoided. Through decades of hard work, strategic refinancing and leveraging the 1031 exchange, he built a real estate portfolio valued at US$500 million (C$700 million).
While buying property today can seem daunting due to high property prices, it’s important to remember that owning a property outright isn’t the only way to invest in real estate.
Passive real estate investment strategies
Few tangible assets work harder for investors than real estate, especially when it comes to generating passive income during an economic downturn. While property values can fluctuate — just like stocks — real estate doesn’t rely on a booming market to generate returns. Here are ways that passive investment in real estate can give you a return.
Real estate crowdfunding platforms
Real estate crowdfunding allows investors to pool their money into larger projects without the need for direct property ownership. Crowdfunding platforms connect investors with developers looking to fund residential and commercial properties. This passive approach lets you benefit from real estate appreciation and rental income without the maintenance and management responsibilities.
Most crowdfunding platforms require a minimum investment, but they offer diversification by allowing you to simultaneously invest in multiple properties. A downside is, these investments can be less liquid than publicly traded REITs, meaning your money may be inaccessible to you in the immediate term. Before investing, research different platforms, their fees and the projects they fund to ensure they align with your financial goals.
Real estate investment trusts (REITs)
For Canadians looking to grow their wealth through passive investments, real estate investment trusts (REITs) could be a suitable addition to your portfolio. REITs own and operate a range of commercial and residential properties, including office buildings, apartments, hospitals and shopping centres.
Canadian investors are attracted to REITs for several reasons:
- Potential to provide a steady income through dividends
- Portfolio diversification
- Access to real estate growth potential
Publicly traded REITs can be bought and sold on the stock market, providing flexibility and liquidity. If you’re concerned about risk, consider a diversified REIT ETF that spreads exposure across multiple properties. Some robo-advisors, like Questwealth Portfolios, offer pre-built ETF portfolios that include REITs to easily invest without the need to pick individual stocks.
On the other hand, private REITs often target higher returns compared with public REITs, but may face holding periods of several years, so investors have less accessibility to funds.
Either way, research a REIT’s stock price stability and dividend history to ensure it aligns with your financial goals before you invest. If you prefer a hands-off approach, an online brokerage like Questrade allows you to buy REIT ETFs at a lower cost, helping you build a diversified real estate portfolio with minimal effort.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.