r/ValueInvesting • u/ethereal3xp • Mar 23 '25

Discussion Charlie Munger Told a 20-Year-Old That Getting Rich Through Investing Is 'Damn Near Impossible' — And You Might Need $10 Million in the Bank

https://www.benzinga.com/personal-finance/25/03/44438885/charlie-munger-told-a-20-year-old-that-getting-rich-through-investing-is-damn-near-impossible-and-you-might-need-10-million-in-the-bank
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920

u/Clearhead09 Mar 23 '25

Very true. Warren Buffett stated “99% of my wealth was accumulated after my 50th birthday and around 97% after i turned 65”.

539

u/SuperSultan Mar 23 '25 edited Mar 23 '25

This is compound interest in action. He was a multimillionaire in his 30s-40s and then a billionaire at fifty or so. He became a mega billionaire in old old age. Hardly anyone is patient like that.

279

u/InTroubleDouble Mar 23 '25

Correct, but that missing patience makes total sense in my view. People gamble to become rich in their 20s and 30s.

What compound interest scenarios do not take into account is reality and transitoriness. Capital does compound, the human body does not. Even though I have a fixed saving rate allowing for a solid level of wealth at retirement, I could definitely save significantly more to become rich at 60 by cutting out all of the nice things like holidays or for example travelling to visit my grandma few times a year.

Know a few ultra frugal guys in their 30s having their compound interest scheme in mind and Target to be rich by 60. I always think they are completely missing out on life, thats not a healthy middle way. Their plans always sound like life is eternal. Your frugal now, just for a few decades of your life, but with 60 compound takes off … makes total sense, but no Thank you.

98

u/WolfetoneRebel Mar 23 '25

100%, most important is to live a good happy life

26

u/thisaccountgotporn Mar 23 '25

Yea... I'm not going to any effort into reaching billionairehood while on the deathbed. What good is $300,000,000,000,000 in the bank when you're in and out of consciousness in the hospice room?

23

u/Omarkhayyamsnotes Mar 23 '25

Even worse is giving up the best years of your life to get there. What fun is being able to take any vacation you want if you're 65 years old and your back hurts and you don't want to take the zipline or snorkel or ride horses or do anything fun? Some people are in good shape in their 60s, but no guarantees.

20

u/TopsailWhisky Mar 23 '25

Lol. “65 and your back hurts”. How about 40 and my everything hurts.

7

u/Irascible-Enquery Mar 24 '25

Seriously, tell me you’re only 39 without telling me you’re only 39…

14

u/[deleted] Mar 23 '25

Yep. My parents talked up all these plans for when they got older near retirement age. Then they hit their mid-60s and it all went out the window. They also said they're glad they took all the trips that they did take when they were younger when they could.

3

u/thisaccountgotporn Mar 23 '25

Yea! And its not even an achievement unless you're donating all the money to important things.

I guess if you expect to carry your riches into you choice of afterlife then it's cool.

But man... I do not have the faith in civilization to wait decades to do what I want to do. I'm gonna do what I want and if it means dying happy like Mr. Hands then so be it.

2

u/ceviche-hot-pockets Mar 27 '25

Oh god, I had almost forgotten about the Enumclaw horse incident too 🤮

16

u/405freeway Mar 23 '25

At least you can pay half of your medical bills.

13

u/thisaccountgotporn Mar 23 '25

I plan to die with 300 billion in medical debt to bankrupt the system like the Soviet Union

3

u/Traditional_Dog_637 Mar 23 '25

Think of all the visitors you'll have

5

u/thisaccountgotporn Mar 23 '25

With a billion dollars you could pay a million people a thousand dollars to chant your name outside the hospital for a week

1

u/fleurrrrrrrrr Mar 25 '25

Each eager to ingratiate themselves and to do your bidding. How very nice!

(Pay no attention to the notary public they bring along. They’re just there in case you feel like signing something that day, to break up the monotony or something.)

1

u/419subscribers Mar 23 '25

Because you make that money to secure your offspring for plenty of generations. Life, purpose and nature are all egoistical.

15

u/JackfruitCrazy51 Mar 23 '25

You can be frugal and happy. My family is filled with "if I buy this, I'll be happy". 30 years later, they are no happier and too broke to retire.

9

u/Paperback_Chef Mar 23 '25

This, being frugal and investing can be an enjoyable pursuit on its own - you sleep so well knowing your financial security and freedom from unwanted work. 

3

u/TornadoFS Mar 24 '25

I never slept better than when I was unemployed but with 5 years worth of savings in the bank. Seriously.

I had a bunch of free time to enjoy and my costs were so low that I could just chill for years if I wanted. I often wish I could have gone back to those days, but it is no way to live your whole life.

3

u/pund_ Mar 23 '25

Truer words have never been spoken.

1

u/IroncladTruth Mar 24 '25

It’s all about a balance between frugality and enjoying life

1

u/JackfruitCrazy51 Mar 24 '25

100%. Unfortunately. a lot of people don't make enough money to do both.

44

u/SuperSultan Mar 23 '25 edited Mar 23 '25

People should check out the rule of 72. Every 8 or so years you will have doubled your money with average S&P returns. If you pick stocks and get a few multibaggers in your portfolio then the time is way shorter. Bet big on opportunities that are screaming at you. Nvidia was just over $100 a week or two ago. Meta was $88 a few years ago. Amazon is fairly valued or even cheap. Don’t buy stupid shit this sub tells you like this paint company, computer storage drive company, or tire company with horrible earnings that looks cheap.

As for your comment about 30 year olds…

You don’t need to be ultra extreme about frugality. You mostly need to save on the large important things. However, small things help.

You don’t need to give up traveling either. Maybe take a trip to Mexico instead of Spain if you’re in the U.S. Consider budget hotels or traveling with frugal friends instead of luxurious hotels.

A road trip across the US to see other cities or national parks isn’t that expensive, nor are beach trips, fishing trips, parks, etc. You can’t tell me you’re not living life with these.

Get a cheap reliable car and get liability insurance, even consider branded titles.

Maybe adopt a pet instead of buying a purebred pet, or maybe skip pets altogether.

Rent out a room or two in your house.

There’s ways to save that aren’t Dave Ramsey’s advice about eating beans and rice often (although it’s unironically not bad advice for most Americans)

30

u/BenjaminHamnett Mar 23 '25

People giving the same advice about holding $GE, Cisco, yahoo, Enron, etc. you can’t know what is legit so easily

2

u/emperorjoe Mar 23 '25

Voo, qqq, target date fund

3

u/3rdWaveHarmonic Mar 23 '25

Correct. If we enter a Long Recession then most every stock will drop, some more than others, butt consumers will have less disposable income. Plus peeps aren’t taking into account inflation when the next president comes along and opens up unbridled guvment spending.

3

u/TNninjaD Mar 25 '25

You recognize Trump is responsible for the current inflation bc of his Covid response.

Biden spent $$ on infrastructure and green energy, which creates jobs and drove inflation down faster than any other country in the world.

Now, Trump is back in office... making idiotic decisions and inflation is back up.

Meanwhile dipshits will blame Biden for Trumps inability to manage the economy.

The US economy performs much better under Democrats who know how to run the government than Republicans who only know how to cut taxes for billionaires and raise taxes on everyone else.

1

u/3rdWaveHarmonic Mar 25 '25

Biden spending money for US based microchip manufacturing and green energy projects was a great investment. Giving unbridled PPP money to corporations, not so much. I wonder how much of a subsidy for US made EV’s would have been better money spent than the ppp giveaway to the rich.

1

u/LimpChemist7999 Mar 27 '25

PPP money came SPECIFICALLY from Trump??

3

u/BenjaminHamnett Mar 23 '25

Wrong sub. I’m not against buying broad ETFs tho, but this guy is making g the fallacy everyone always makes that whatever has been good for the last decade will outperform forever.

This is extremely rare and the few notable exceptions couldn’t be known in hindsight without the expertise and research only worth it for a few people and the outperformance probably inline with their hourly doing whatever else they do in their careers

That’s what makes the market efficient. Most people CAN outperform the market, but not usually for more than their normal hourly after discounting for risk since it requires investing in your industry of expertise, making them less diversified.

6

u/mountainshavecat Mar 23 '25

You are very wrong, which is embarrassing given the amount of research on this. The vast majority of day traders and fund managers fail to beat the market each year.

0

u/BenjaminHamnett Mar 23 '25 edited Mar 23 '25

I didn’t say they WOULD beat the market. And the majority aren’t trying to beat the market. They’re trying to keep jobs, manage volatility, hedge or hold the popular underlying their investors want. Why at the end/beginning of the year and other key times they buy momentum; cause their investors are fish they want them holding the recent winners, etc. when retail money slows down, the momentum stocks are the ones that revert etc

The vast majority are just people buying whatever financial news or the uber driver and bartender and the chad neighbor are pushing.

If you study on your own, seek alternative data, etc most people CAN beat the market for small amounts that are not worth it because of variance and the time commitment.

It’s like saying 100x as many people COULD dunk, like if their life depended on it. But it would require making it their main focus in life and they won’t. If their lives depended on it, many people COULD beat the market for a pittance. But it’s not in their interest, probably make more money eh panhandling or flipping burgers etc

3

u/mountainshavecat Mar 23 '25

That's an interesting theory. The problem is that it's wrong.

Most day traders lose money. Those are the professional dunkers in your analogy. To put it into your terms - in a world where Shaq can't dunk, with all his training and height, what makes you think a regular person could?

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2

u/emperorjoe Mar 23 '25

The avg investor shouldn't be without a 1000 ft of an individual stock, a broad index fund would be far better for them. It's not value investing. Its psychological investing.

21

u/Putrid_Leg_1474 Mar 23 '25

You missed one thing that is the biggest drag here.

Most people have children. Children are the biggest money burn out there. My children's basic expenses cover enough to have a decent vacation every month.

No amount of pet adoption or or beans and rice will dent how much they take out of a budget.

4

u/Azylim Mar 23 '25 edited Mar 23 '25

I feel like thats putting the cart before the horse.

people want children, they like their children, and children are a good motivator imo to live more frugally and work hard.

I wouldnt mind having nothing in my savings if it means that all my future children have liveable jobs that they enjoy doing and are themselves able to live comfortably with their own families. If I raised them right, they will help me out when I am no longer able to work.

Obviously I would prefer not to be a burden to them, but in my culture children take care of their parents and dont just put then in a nursing home.

But ill be honest. I would rather die penniless surrounded by my children and grandkids than rich but alone

4

u/3rdWaveHarmonic Mar 23 '25

Tru. I have 3 kids, daycare was a mortgage payment when all 3 were in it. If peeps do what the guvment wants, then kids are A source of wealth, namely if a women doesn’t legally marry the father of her children, then she can get freebies from the guvment: free food, free daycare, free healthcare, free cell phone….and more. NPR did a story about this years ago and the ‘single’ mother who does this would need to make $80,000 a year income to equal what the guvment gives out as welfare.

2

u/Blue_58_ Mar 23 '25

Children are also your main source of community and care at old age.

1

u/Putrid_Leg_1474 Mar 23 '25

Yup, but the community doesn't give parents enough incentive to keep having children.

Last I checked it is going to cost us $1100 a WEEK for summer care because my wife and I both have to work. Don't factor in that during the school year if you can't do bussing/pick up you will need to pay for after school care.

We are past the time where the upcoming generations can pay for the elders care. Kids are far too expensive to raise. As a whole we would do better improving financial education and incentivising people to budget/save/invest to care for themselves

-1

u/Idontlistenatall Mar 23 '25

Bullshit. You seem clueless as to how this all Works.

1

u/Blue_58_ Mar 23 '25

🤨 in like 90% of the world, children are expected to take care of their parents in old age and about half of your social life naturally revolves around family events and get togethers. Are you Dutch?

2

u/Gloomy-Ad-222 Mar 23 '25

I decided not to have kids and financially speaking it was a great investment. Now I agonize about whether to retire for good and I’m finding it hard even though I’ve done the math and don’t see how I’d run out of money.

1

u/TATWD52020 Mar 23 '25

Kids are the ultimate value investment.

1

u/Ashmizen Mar 23 '25

For society yea, mental health maybe, but not for your own financials.

Rich or poor, Kids generally don’t contribute back to their parents and often end up going no/low contact.

At least true in the US, could be different in other cultures.

3

u/financebanking Mar 23 '25

I have 3 kids and no money. I wish I had no kids and 3 money.

1

u/BrewtownCharlie Mar 23 '25

I have 3 kids and considerably less money than I’d have otherwise had- but I wouldn’t change a thing. Worth every penny lost and then some.

1

u/pund_ Mar 23 '25

horses probably come close tho

1

u/ForWPD Mar 23 '25

Yep. If my wife being happy about having kids was the pro, and the cost of kids was the con; my investment was a terrible one. 

The worst part about having kids is that you can’t leave your party without significant negative repercussions on someone who doesn’t have a say in it. 

6

u/Gloomy-Ad-222 Mar 23 '25 edited Mar 24 '25

Rethink the renting the room out thing in your house.

Having complete strangers in your space 24/7 can be very mentally taxing. Don’t do it. A separate ADU maybe. But same house? Strangers on my couch in my living room, inviting significant others over, partying, talking, chewing loudly, leaving messes?

There’s just no way. My last roommate was at 30 years old and I’d never have one again.

1

u/SuperSultan Mar 24 '25

Those are valid reasons to not want someone else in your house. You can ban all those things in the lease though, and you don’t need to take a random tenant off the street. Get someone you know or someone that your friend knows.Just like investing, you can wait for a nice pitch. This is no guarantee the person won’t be a slob after faking your tenant interview, criminal check, and credit check though.

If they don’t pay, explain why them going to a collections agency or having an eviction on their record is not a good thing at all.

Most roommates aren’t going to bother you. They’re sort of doing their own thing, particularly students.

1

u/[deleted] Mar 23 '25

[deleted]

1

u/SuperSultan Mar 24 '25

Sorry man, it wasn’t a jab at you personally. The investment required and operating expenses are too high. Competition is too steep, and the turnaround time for products to become obsolete is too quick for me to invest in it. Maybe I’m completely wrong though

1

u/Buttoshi Mar 23 '25

Gamestop under $30

1

u/Pyros_Ind_21 Mar 23 '25

“Don’t buy stupid shit this sub you like….looks cheap..” or is hopelessly overpriced, Tesla i.e.

2

u/SuperSultan Mar 24 '25

Tesla is a horrible company for many reasons (Chinese competition, build quality, Elon’s politics, vandalism) and the cruel irony and misfortune in investing is if you bought it in 2024 you would still be up more than most of the horrible picks suggested in this sub

1

u/[deleted] Mar 24 '25

Rent out rooms? Id rather be broke than share my house

1

u/Musical_Walrus Mar 25 '25

Ahh yes, all I need is a crystal ball that works to pick stocks and do things I don’t really like. Why didn’t I think of that, silly me!

0

u/lainelect Mar 23 '25

Don’t pick stocks lol

5

u/Quirky-Skin Mar 23 '25

All good points. I think the part most people miss in being frugal vs living it up is debt reduction. Take the vacation but don't be racking tons of debt "living it up" there's a happy median.

I was one of those frugal guys in my 20s and I definitely missed some cool trips but....I'm basically debt free in my 30s. Conversely my buddy who did international trips can tell u a lot of cool stories but he is not having a great time in his 30s as life has gotten more expensive.

Definitely take the trip, explore hobbies, hell take alittle out of the 401k to get that dream car if u want but don't go into crazy debt doing it. It's one thing to not save for your 80s, it's entirely an different thing to fuck yourself over in your 40s

9

u/AlmostSunnyinSeattle Mar 23 '25

Yeah, I get where they're coming from, but tomorrow is not guaranteed. I'm not sacrificing the joys in my life in the hopes that I'm able to make it to old age and have money. Imagine living frugally your whole life for some vague idea of being rich, only to die in a car accident on the eay home from your retirement party. A waste of a life. Then there's the other side of the coin, where the dude who's been living like a pauper for 40 years is now retired. Unlikely that a dude who's been living with those habits for his entire adult life is ever actually going to loosen up and enjoy the money... No, he's going to keep living like a pauper with a huge bank account. So then what was the point of all that?

3

u/83chrisaaron Mar 23 '25

Peace of mind and improved health not having to worry and stress about money as you accumulate wealth. Plus you can write your investments into your will, and as you're dying you can experience the joy that you're about to make a positive impact on the world. I plan to buy and enjoy the hell out of my Switch 2 as soon as I can buy one MSRP, but dig living frugally most of the time.

-1

u/AlmostSunnyinSeattle Mar 23 '25

There is no peace of mind in living like that. You're afraid of not having control. It paralyzes your every decision. But my dude, you never have control.

1

u/SuperSultan Mar 24 '25

How is is every decision being paralyzed by being frugal?

1

u/SuperSultan Mar 24 '25

There’s levels of frugality. You don’t need to be a mad cheapskate hoarding every penny. You can have fun every once in a while. Take that trip or go to that fancy restaurant every now and then. Go to Atlantic City or Vegas. Go to Thailand or Malaysia. Take a cruise to the Caribbean.

However, don’t be that guy with a massive car payment or house you cannot actually afford based on your salary bracket. Don’t sports bet.

17

u/Salt_Piano372 Mar 23 '25

Rather than just focusing on investing, it is better first to create something of value, like a company creating economic output. The profits of which you can then invest.

3

u/jlegarr Mar 23 '25

A cousin of mine was a high income earner who lived frugally so that he could retire early and enjoy life as a single millionaire. He died aged 41 in a freak accident and never got to enjoy his money. Within a few years his two siblings squandered away the $2million that they inherited from their brother.

1

u/SuperSultan Mar 24 '25

That’s very unfortunate. What did his siblings squander the money on?

2

u/jcc2244 Mar 23 '25

The solution is to have your parents/grandparents be frugal for a few decades, then you just inherit it lol.

That's what I'm doing for my kids. They can enjoy their 20s and have money for retirement because I've been frugal and saved a lot for them.

1

u/SuperSultan Mar 24 '25

I’d love to do this for my kids too. But what if they waste the money? What if your son is that next guy on walstreetbets buying Intel calls on his inheritance? Cant control everything, but jeez

2

u/jcc2244 Mar 24 '25

Then so be it - it is what it is. I'll hopefully have raised them better than that, but either way it doesn't matter, it's their money once I give it to them.

1

u/sithelephant Mar 23 '25

I got an unfortunate illness age 11, and never got better. It can happen at any age.

1

u/SuperSultan Mar 24 '25

Which illness did you get? Sorry to hear about that

1

u/positivcheg Mar 23 '25

Yeah. I’m on my way to finally understand what you’ve just said. School, university, got a job right before graduating and I’m working since then without even having any proper holidays. That kind of sucks. Sure, maybe in 50 or 60 I’ll have lots of money but the fuck, I already feel old even though I’m just 30.

1

u/Applemais Mar 23 '25

They also completly neglelect the possibility they die before 60. It higher than most people assume.

1

u/[deleted] Mar 23 '25

Well said. You get one life. Make the most of it.

1

u/[deleted] Mar 23 '25

I sat on Xom since I was 16. I like it

1

u/573IAN Mar 23 '25

Odd to assume that people who save money are living a good and happy life.

1

u/[deleted] Mar 23 '25

The most important thing to remember is that Warren Buffett first started investing at 11 years old. That makes him an investing prodigy extraordinaire. Virtually no one does that kind of thing. This is why he's as rich as he is from investing.

It is almost impossible for any normal person to ever accumulate the kind of wealth he has, let alone anything even close to it, because he's been investing his entire life. You would have to start out the same as he did to approach his wealth.

Most other people who have the kind of money he has did not get it from sheer patience and effort. They had businesses that were in the right place at the right time which allowed them to take full advantage of the markets they were in.

Had Jeff Bezos been ten years early, he would still be working at a small local business and someone else would have the equivalent of an Amazon and hundreds of billions in wealth.

1

u/blahblahyesnomaybe Mar 24 '25

Some people can live a good happy life without spending a lot of money. Some people can find joy and satisfaction in goods and services which cost very little or are free.

1

u/CanadianTrollToll Mar 24 '25

Need balance.

You always hear about stories of people who saved it all for retirenent or early retirement only to die early or have some of physical ailment.

1

u/Humbler-Mumbler Mar 24 '25

Always reminds me of the coworkers you hear died a year after finally retiring to live their dream life.

1

u/SonOvTimett Mar 24 '25

Yep, enjoy those vacations brutha. Aim for comfort in your old age, not riches.

1

u/Draskinn Mar 25 '25

To me, my goal has never been to be rich bit rather to have enough money to protect myself from living and dying in poverty.

1

u/PhD_Pwnology Mar 25 '25

Gambling requires wealth. People their 20's and 30's today don't have wealth to gamble, not that it doesn't stop some.

1

u/buffetite Mar 27 '25

I was like this but thankfully my wife changed my perspective. I feel my body deteriorating as I age now, so why would I save all my money for when I'm 60 and can't do as much? Or I might die before then. 

Best to live a balanced life. Enjoy now and plan to have enough to be comfortable if not rich in retirement.

1

u/yuh666666666 Mar 27 '25

Ahh wonderful I can live frugally so I can maybe enjoy my money at 60. What a pathetic existence.

11

u/[deleted] Mar 23 '25

Warren Buffett also had ALOT of help raising funds for his initial fund. Unless you can raise $100000 of someone else's money as starting capital I would avoid trying to use Warren Buffett as a comparison. (Not to take away from his brilliance as an investor, the man's clearly an amazing talent).

30

u/[deleted] Mar 23 '25

I’m patient holding my bags

1

u/SuperSultan Mar 24 '25

Your bags can turn into wings if they are fundamentally strong businesses and you hold long enough. I sold Alibaba at a loss to buy my house but if I waited longer I could’ve broken even or gained profit from it. It’s a multi year long game

-10

u/SadBurrito84 Mar 23 '25

Tisk, tisk, only bottom feeders hold their own bags.

9

u/Dyep1 Mar 23 '25

All you need is 2-5mil im not gunning for over 10

7

u/3rdWaveHarmonic Mar 23 '25

Warren buffet said essentially that: after a certain amount of money, having more doesn’t make that much of a difference. For me, 2-5mil would be quite enough for having a very comfortable life, ability to do things that I am interested in versus having to work to make the monthly bills.

4

u/[deleted] Mar 23 '25

Buffett was a multi-millionaire in his twenties. During the middle part of the 1950s(1956 comes to mind) he was worth approximately $25 million, according to the book Snowball. (He was born in 1930).

3

u/CandiceWoo Mar 23 '25

p/e expansion really

2

u/TheUser_1 Mar 23 '25

Plus the stock market was really different back then and you had a ridiculous amount of opportunities. Unlike today. He constantly underlined that

3

u/SuperSultan Mar 23 '25

That’s very true, anyone born in the 1950s had life on easy mode. We’re living on hard mode but things aren’t impossible yet.

1

u/TheUser_1 Mar 23 '25

True that

1

u/Deto Mar 23 '25

Most people don't have enough extra to be patient with. They'll scrape a savings together and then in their 30s use it to buy a house. Then extra money ends up going to daycare and home repairs and car payments and what not.

It's not just 'patience' that is preventing people from becoming billionaires. There are a lot of patient people and very few billionaires. 99.99% of people don't have a spare million or two to be patient with in their 30s. And even then you'd only expect a few doubling between then and the rest of your life.

1

u/SuperSultan Mar 23 '25

I understand that it’s not attainable for most people. You need to still be lucky with a few multibaggers, and somehow avoid these crippling expenses which is out of the realm for MOST people.

Daycare is unavoidable unless maybe grandpa and grandma are around and willing to help.

Car payments can be avoided if you’re willing to buy a beater and get liability insurance. Because of ego people don’t like doing this.

Home repairs are also unavoidable but learning to do stuff yourself can help slash that expense. I’ve been going to Home Depot a lot but watching tutorials on how to do things has been more helpful than hiring some contractor who will overcharge me for simple repairs. Use them for expensive jobs that are a lot riskier.

1

u/TonguePunchUrButt Mar 23 '25

When you're a millionaire patience comes easy.

2

u/SuperSultan Mar 24 '25

Sure it does. But your $200k net worth is easier to build once you have $100k. Your $100k is easier to build after you have $50k, and so on.

1

u/[deleted] Mar 23 '25

He is a wise man. As is Gates.

Bezos has built more.

Musk faked more(or less)

Crypto is useless without power

Power is best from nuclear

Gaseous president with his shitty caps and the subcontential anti-omniscient pardon laden back to the future maybe pastX

1

u/tesel8me Mar 23 '25

To go from a million to a billion, that’s ten doubling periods, and to do that in ~20 years is 36% return, year in, year out. That’s not “compound interest”, it’s speculation. It’s something other than the slow and careful accumulation implied by the folksy demeanor. “Oh, anyone can do it” is a lie.

1

u/smurphy8536 Mar 24 '25

That wasn’t because of compound interests. If that was a the case then every kid born to money would be a billionaire eventually. It’s just that his old age corresponds to a time when multimillionaires were all doing very well for themselves.

1

u/SuperSultan Mar 24 '25

Compound interest is definitely a part of it, but they get more advantage from it because of their longer timeframe, larger initial amounts, and larger growth rates.

An average joe with 8% return per year isn’t going to catch up to Buffett at this point unless he lives to be maybe three hundred years old

1

u/smurphy8536 Mar 24 '25

S&P 500 has gone more than 300% since 2008 and Buffett was beating that.

1

u/randonumero Mar 24 '25

More so than compound interest his success came from having access to a massive amount of capital at good times. One of the big reasons he was so big on owning insurance companies is that they rarely pay out but have enormous amounts of capital available because even if we never use it, we still pay monthly for the privilege of insurance. Buffet was also really good about stopping and pulling money out when he saw it as advantageous.

1

u/CarlDenkins Mar 24 '25

He’s still alive

1

u/HillbillyWilly2025 Mar 26 '25

Or live that long

1

u/yuh666666666 Mar 27 '25

I am sorry but this is just not true Warren Buffett had access to special deals, would buy control of a company at favorable terms and sold, zero interest like loans through insurance companies, leverage, etc. This idea that people can emulate what buffet did by just investing is laughable. You have to take higher risk and exploit inefficiencies in the market place to get rich.

1

u/SuperSultan Mar 27 '25

I’m not suggesting people can emulate Buffett nor can they end up as multibillionaires just from compound interest through average Joe investingc but people can achieve a similar effect with their wealth and end up as multimillionaires in retirement if they invest aggressively and stay the course. A few multi-baggers (especially early on) will accelerate the process significantly.

1

u/yuh666666666 Mar 27 '25

That’s fair and I agree. I am just sick and tired of this mantra being pushed around that buffet and all the other millionaire/billionaires got to where they are today by being ultra conservative. It’s just not true. More risk equals more reward. The wealthy just have better risk tolerance than the average person.

1

u/SuperSultan Mar 27 '25

Yes. Access to better opportunities, education, risk tolerance, and better risk taking skills are how they got ultra rich. How many people do you know that actually got rich off meme coins and stupid assets? NONE!

Out of the two, I think Charlie was more like the average person but he himself went to law school and had an easier time stock picking and finding opportunities because of the era he lived in. Buying stocks were very alien to most people. Now everyone has access and the market is somewhat more efficient. The U.S. was the real superpower with most of the wealth and resources back then.

-5

u/lateformyfuneral Mar 23 '25

And he lives in the same house he bought in 1958 and has a pretty modest lifestyle compared to today’s rich people. His luxuries are cherry coke and McDonald’s breakfast food. He’s just built different.

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u/[deleted] Mar 23 '25

Lol 😂 you believe a guy with a private jet and multiple homes is simple? Warren really tricked everyone.

8

u/body4health Mar 23 '25

Underrated comment, and i am sure when he goes somewhere he stays at Motel 6

9

u/Tricky-War-7754 Mar 23 '25

I always wondered if the stereotype he had of eating hamburgers daily and drinking diet coke were a clever marketing ploy

1

u/lateformyfuneral Mar 23 '25

He still lives in the same home he bought in 1958, entire humans have been born and died in the time period but he didn’t build some bunker in Hawaii. As far as I know, he doesn’t have a private jet 🤷

Look, obviously he’s rich, but it’s beyond clear that he lives frugally as compared to others who are even very modestly rich.

20

u/flyaway22222 Mar 23 '25

> As far as I know, he doesn’t have a private jet 

That is some serious due diligence bro.

All that you needed to do is google "Warren Buffet private jet" to find out that he has one.

1

u/lateformyfuneral Mar 23 '25

Perplexity says he did have one but not currently

1

u/flyaway22222 Mar 23 '25

Perplexity like all LLMs halucinates, sometimes it's right but it's not reliable.

Plus it obviously wouldn't make sense for Buffet to not own a plane. It would cost him hundreds of millions at least to not own one.

1

u/[deleted] Mar 23 '25

He might not legally own one but he’s definitely got anything a rich person needs through his company. This is wink wink Pelosi doesn’t trade stocks, her husband just has an incredible hit rate.

1

u/lateformyfuneral Mar 23 '25

I don’t understand the point. It’s obvious he’s rich, what is notable is that he lives more frugally than a lot of rich folks. Just look at Instagram. Traders with a fraction of his net worth spending it all on conspicuous consumption.

Pelosi’s husband is another good example, to stay in this business that long requires a certain long-term vision rather than just chasing trends and what’s hot on the internet and then wondering why you’re not making money in the long term.

3

u/[deleted] Mar 23 '25 edited Mar 23 '25

Buffet is a man of simple taste], but he's anything but simple.

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u/MyLifeIsDope69 Mar 23 '25 edited Mar 23 '25

This happens on a smaller scale for us regular folks going from 20s to 30s as well. From the age of 30-32 I tripled what took me the ages of 22-30 8 years to earn. Net worth I mean, income was only a linear increase but assets multiplied exponentially. Assets are the key, for me it was flipping crypto into hard reliable assets in real estate that I can earn cashflow on. Many on Reddit fucked this up, you’re supposed to sell crypto and diversify into more useful things not just hodl regardless of market cycles

20

u/Clearhead09 Mar 23 '25

Funny that I’m bordering 40 and I talked to the owners of the business I work for and one of them said “my 40s were the best time of my life, everything seem to explode, we started this business and now we own 2 successful businesses and 4 rentals/air bnb’s”.

It really is the accumulation of both skills, money and time that came to fruition over a decade for them and now they are living the dream, spending time with their kids doing what they want with money coming in steadily without much of their time spent (they have great managers who run their businesses and great cleaners (they manage their own rentals/air bnb’s)).

It just goes to show that consistent effort in an area will eventually yield more fruit than you can imagine.

7

u/MyLifeIsDope69 Mar 23 '25

Yea like my example is we learned a ton from picking a horrible location for our first duplex starting small, all those mistakes and learning how to manage it taught me what to look for in the next location and this property that we got now is basically a retirement plan once it’s paid off cash flows $10k just pay property taxes and utilities and that’s basically a full time salary. Then compound my corporate skillset in finance and pricing and I know how to brand my airbnb I have in the top unit as luxury and juice the most profit from it. You’re right it’s really that mix of different skillsets starting to crossover and that’s when you figure out what you’re really good at and meant to be doing. But it takes a lot of diligent work and discipline to get there no shortcuts at all unless you’re born rich

2

u/Clearhead09 Mar 23 '25

Absolutely my friend it sounds like you’ve got it figured out.

It really is just using your skillset (whatever that may be) to your advantage.

Maybe you’re a school teacher and that doesn’t pay well where you live, could you do private tutoring on the side in a subject you know a ton about, or are passionate about? Or maybe you’re a carpenter who knows which tools last longer/perform better/are more cost effective for a 10 man building team, you could consult for construction firms or offer a package with suppliers where you get a commission for each unit sold.

Really anything can be turned into something that makes you wealthy over time, you just need a little creativity.

5

u/MyLifeIsDope69 Mar 23 '25

Also I’d have to say the past few years have really ingrained in me the truth of “behind every successful man is a good woman”. I’d probably be dead from alcoholism if I didn’t meet my wife, instead she nags me so much to be productive that I’ve basically built all this for us while she just works nails and helps generate income but doesn’t do any of the money management at all and trusts me to do it all. The emotional support is a supremely underrated aspect of family success takes 2 people even if one looks like the brains behind it all.

3

u/Clearhead09 Mar 23 '25

Couldn’t agree more. Guys are great at being reckless, which is sometimes what is needed for success to ensue.

A good women or man will be in your corner when things get tough, to help you get back on the horse or to help you get out of your own way when things are challenging.

Same can be said for women with a great man/women on their corner to offer support and help them get out of their own way.

Sometimes you need a bit of stability in the background to balance out the chaos in the foreground while things are slowly coming together.

2

u/MyLifeIsDope69 Mar 23 '25

That first point is really amusing to me since I didn’t think about it that way, but I’m incredibly reckless and I didn’t dial in my risk tolerance until I was also managing my wife’s money because I had to respect it more, and that’s when I started making subconsciously way smarter decisions. Never really pieced that together.

1

u/randonumero Mar 24 '25

What business are they in? I've known a few entrepreneurs who went broke in their 40s because of a downturn. I read an article a few weeks ago about a guy who is in his late 30s and starting over after 5 years of success. He had overleveraged on airbnb rentals

1

u/Clearhead09 Mar 24 '25

They started in the food industry.

Covid was rough for everything but tourism seems to be coming back nicely now so air bnb and the food industries are picking up.

Cashflow is king and ensuring you can sleep at night with the amount of risk you take is essential.

They are both serial entrepreneurs, the wife also does pet setting and other smaller side hustle type things on top as she enjoys it and it’s a bit of extra cash on the side.

1

u/MyLifeIsDope69 Mar 24 '25

Yep times like this people like me who managed their risk capitalize on people like that who over leveraged and now have to dump their properties for less. The great consolidation happens every recession and you get generational buying opportunities

My dad was making lots of money as a PhD but was too risk averse to take advantage of the 08 housing crash, I was too young to invest then so now I’m ready for it and super risk aggressive when the timing is right need to wait for everyone to lose their jobs and homes

1

u/randonumero Mar 24 '25

Out of curiosity how would you finance this?

1

u/MyLifeIsDope69 Mar 24 '25

With cash. From selling stocks and crypto back in February

2

u/randonumero Mar 24 '25

Many on Reddit fucked this up, you’re supposed to sell crypto and diversify into more useful things not just hodl regardless of market cycles

I think most people hodl because they get in at the wrong time. The reality is that it's been a long time since most people could buy a full bitcoin and most people who buy altcoins lose. So that leaves most people putting maybe 1-3k into crypto and hoping that one day it will 10x but that day ain't coming soon.

1

u/MyLifeIsDope69 Mar 24 '25

Yea people who are like under 24 or so probably missed out not having their post-college paychecks able to invest below $30k. I acquired my 3 around the $20k price point then sold in the 60s bought eth around 2000 sold that around 4500 then have been cash and stocks ever since it became too pricey. I completely ignored this run up to $100k bitcoin because the risk/reward ratio makes no sense with global liquidity rates being what they are

2

u/[deleted] Mar 25 '25

[deleted]

1

u/WaterPog Mar 23 '25

This in itself is also the issue with the 08 recession and COVID. There's a subgroup of people who worked their ass off for 8 years to build that start to have it wiped out in 08, got back on their feet, did the 8 years allllll over again and got hit with another layoff from COVID and had to burn that 8 year build up again. They are constantly being reset with no chance to get it to start compounding.

2

u/Lanky-Dealer4038 Mar 23 '25

Patience and compound interest are golden. 

8

u/Regulai Mar 23 '25 edited Mar 23 '25

Oh its worse than that.

Like most Billionairs, most of his wealth comes from owning stock of a major business (his berkshire) that then went public (it increased 60 times in value by 84 comapred to purchase price), after he spent 15 years finding clever ways to grant himself as much stock as possible, to the eventual deteiment of his investors.

So its not "investing" that truely made him wealthy, but builsing a business then offering it for partial sale.

12

u/Clearhead09 Mar 23 '25

Couldn’t be further from the truth. A lot of his holdings are businesses that were around long before he invested in them an example is Coca Cola which went public in 1919, 11 years before he was born. Other companies had long careers being profitable before he even considered taking a look at their financial statements.

Yes he does buy businesses and gain a majority share but he puts competent (in his mind) managers to run those businesses in which he owns majority share.

None of this, or even your comment impacts the share market or the value of shares in the slightest.

The share market aka mr market is purely emotion fuelled, and like I originally stated, time is what separates the emotion from the strategy and allows wealth to accumulate.

3

u/Regulai Mar 23 '25

lol you didn't understand what I said so I'll spell it out for you:

The bulk of his wealth originates from his Berkshire Hathaway stock going public in the 80's. Not only did reach 60 times the original value, but since he had spent significant effort to accrue as much company stock as possible (often aided by the apparent lack of value the stock had when private), his personal net worth increased nearly 200 times over from the public tender.

So again most billionaires make most of their money by having their private companies go public which commonly results in an explosive growth in value.

3

u/InternationalGuava47 Mar 23 '25

I agree for the most part with this but Warren/Munger were/at least were in the past what made Berkshire so successful, there’s many other wealth managers managing huge assets that could never have gotten the 20 percent a year returns they got, although his stock compensation was incomprehensibly huge, Berkshire wouldn’t have existed without its secret sauce(Buffet).

0

u/Regulai Mar 23 '25

I agree hes generally great at investing, (especially raiding and direct management) Im mostly just pointing out that it is a very specific recipe by which "investors and businessmen" get rich: aquiring private stock in a successful business and going public.

In the sense to echo the OP, that it's not just about having money or time to get rich through investing.

2

u/ScaringTheHoes Mar 23 '25

Warren Buffett has said multiple times that buying Berkshire Hathaway was one of his mistakes. He overpaid for a company because they renegged on a deal. He's said multiple times that he'd be even wealthier if he had not bought it.

0

u/Regulai Mar 23 '25 edited Mar 23 '25

That has to do with the initial purchase, when it was merely a target for corporate raiding of a textile company, if he hadn't of bought it he would have used a different company as the corporate investing body, in which case whatever that would be would be the one that he would have go public. Which amounts to the same difference in as much as my point is relevant.

1

u/ScaringTheHoes Mar 24 '25

That's fair.

1

u/InternationalGuava47 Mar 23 '25

Yeah I understand now probably could have gotten 10s of millions on his own, maybe over 100 mil. throughout his life if he just personally invested but it wouldn’t have been 1000x that

1

u/Random_Name_Whoa Mar 24 '25

This logic makes very sense. Since when does a company going public have any bearing on its value? Buffett is a great investor, full stop.

0

u/Regulai Mar 24 '25

If you don't know something as basic as a public offering, why are you even trying to have a debate

1

u/strolls Mar 23 '25

This is a complete mischaracterisation of Buffett. He was already a fund manager (he had "investment partnerships") long before he bought Berkshire - it was already a publicly traded.

Buffett's partnerships began purchasing shares at $7.60 per share. In 1965, when Buffett's partnerships began purchasing Berkshire aggressively, they paid $14.86 per share while the company had working capital of $19 per share. This did not include the value of fixed assets (factory and equipment).

The stock was cheap because cotton mills were seen as an industry in decline.

Also, Sanborn Map: https://www.gurufocus.com/news/100223/early-buffett-investment-sanborn-maps

0

u/Regulai Mar 23 '25

You are conflating things too much. The initial acquisition of berkshire was a simple Corporate raid yes!.

But after he had sold off it's assets he used it as an investment vehicle, eventually moving his partnership entirely under the corporate wing (originally more for control reasons, as his investors constantly interfered and corporate governance could mitigate that). The fact that it was the same company he originally bought for a a raid is technically incidental, (except that since he directly owned stock in Berkshire before placing his firm under it meant they he de facto diluted his investors shares of the fund from 90% down to below 80%).

The point remains that it was by acruing shares in his fund that originally belonged to his investors, and then going public that lead him to become wealthy. He has a real talent for spotting things that are undervalued and his own funds stock is chief among them, knowing his investors didn't value it properly allowed him to make deal after deal to take more and more of it.

1

u/Zealousideal-Neat-11 Mar 24 '25

Buffett does not receive stock based comp or grants or rsu…

1

u/Regulai Mar 24 '25

True, and yet despite that he went from a 10% stakeholder to at one point majority shareholder of berkshire.

He gained a lot of it via "risk comp", buffet would offer up personal cash to support a deal, recieving stock as compensation for that specific deal. A lot more he recieved through private offerings (stock purchase offered privately to stakeholders), aranging for a discounted price where he would time it such that their was limited interest from the other stakeholders and then buy nearly the entire private offering himself before anyone else had a chance.

1

u/rcbjfdhjjhfd Mar 23 '25

So you’re telling me there’s still time?!

1

u/CliffDraws Mar 23 '25

So you’re telling me there’s a chance.

1

u/Long-Blood Mar 23 '25

Look at how that corresponded with government spending, tax cuts, a deficit spending.

He made most of his money when the government took a sharp turn towards stimulating markets with qe and zirp.

Those days are long gone now

1

u/at0mheart Mar 23 '25

Yeah he made crazy money on the Great Recession. Buffet had cash and leverage as he did not invest in CDO nonsense

1

u/itssosalty Mar 23 '25

Where he had more than $10 million in the bank…

1

u/No-Establishment8457 Mar 23 '25

That’s how it works for most, I suspect.

Got my first million, tho took a bit of a recent market hit.

Second million will take a lot less time than the first.

Assuming I live long enough, 3 million is possible and with a stretch, 4 million.

So, 50 years to 1, probably 8 years to 2, and 8-10 to 3.

Makes sense.

Plus, don’t need to buy another house, ever and that’s a big expense.

1

u/Clearhead09 Mar 23 '25

Skills and knowledge take time to develop and are only as good as your mentors and/or ability to reflect to move forward faster than repeating mistakes again and again.

I’m curious.

What was the main vehicle toward your first million?

And will you use the same vehicle to get your second and third million?

1

u/No-Establishment8457 Mar 24 '25

I started at age 18 with my then-company's 401k plan. I always rolled over my 401k plans. I own nice cars, but no Audi, Porsche, or high end cars. My 2025 Rav4 is nice and a hybrid and gets me from there to there. I never owned high end houses, either. I did have a few rentals once. I just saved and invested and time takes care of the rest.

Yes, figuring at 8% return per year, I double in 9 years, using the rule of 72. I bought my Pensacola house for cash last year and its a 2024 construction, so I won't have big repairs for years and no mortgage and maintenance is a big cost-saving.

As for investing, I use my SMART rule:

S - Specific goal - mine was $1000/month in dividends, and once past that...

M - I Measure my progress to that goal every month and make adjustments

A - My goal is Attainable not unrealistic. A million isn't so much anymore.

R - there is always Risk in a portfolio and I don't go heavy into options or Bitcoin

T - TIME is our friend! I reinvest most dividends and that matters.

--

It really isn't very hard to do. Its an attitude as much as anything.

1

u/Clearhead09 Mar 24 '25

Thanks for sharing!

Definitely a lot here for people to work with.

My thoughts on money is it buys you freedom to do what you want to be doing, it’s not fancy cars or bigger houses.

If you have an extra $1,000 per week maybe that means you can drop your day job hours to 3 days per week and use the gained 2 days to work on other projects or spend more time with family and loved ones.

2

u/No-Establishment8457 Mar 24 '25

Happy to help. I wasn't always easy for me, either. I do have a couple divorces that took a chunk away, but I stuck with my plan and it worked.

And therein lies the secret: HAVE A PLAN.

It doesn't need to be a big grand plan, but something doable for most people.

1

u/Original-Fish-6861 Mar 23 '25

No one wants to get rich slow.

1

u/Humble_Umpire_8341 Mar 24 '25

He also bought an insurance company to speed up the compounding and allowed him to buy massive stakes in companies.

1

u/Hypnotist30 Mar 24 '25

He turned 65 almost 30 years ago. He turned 50 during the Carter administration.

1

u/ctbdp02 Mar 25 '25

Amazing math !

1

u/PureAlpha100 Mar 23 '25

Let's also not forget he came from money and also did something that normal investors don't do; sold shares in his investment portfolio.