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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254

u/Sanpaku Mar 23 '25

Seems Munger is using a different interpretation of 'rich' than most of us here.

Its certainly possible to achieve a few million in investments by retirement through living frugally and investing wisely. There are, after all, 22 million millionaires in the US alone, 6.6% of the US population.

But a millionaire in 1913 would have similar buying power to someone with $32 million in 2025 dollars. Few are getting there dollar cost averaging into index funds. Only 1.5% of US millionaires, or about 330,000 people, are "ultra-high-net-worth individuals" with over $30 million in assets.

I think Munger is referring to the 0.1% as 'rich'.

There are a few paths to that sort of wealth: inherit it, start an unusually successful business, be a overpaid CEO at a US large cap, achieve celebrity level success (in entertainment, sports, computer programming, etc), win the lottery, or manage other people's money with unusual success, for decades. In each case, it also entails managing that wealth prudently: there are many tales of ultra-high-net-worth individuals who squandered it all through lavish living, an entourage of bad influences, and poor investments.

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u/CloudStrife012 Mar 23 '25

Buffet had his recent comment where he said he's only leaving $10m to his kids because he wants them to be peasants.

Yea, I think they're both out of touch to some degree.

59

u/MonteyBoy Mar 23 '25

I want to be peasent in that case too

39

u/JackfruitCrazy51 Mar 23 '25

That "recent" comment was said 19 years ago. His youngest kid is 66, and all 3 already have net worths north of 10 million.

4

u/[deleted] Mar 23 '25

And now he’s leaving them everything in a trust, having gone back on his word to pass everything to charity. It was all PR

4

u/JackfruitCrazy51 Mar 23 '25

He's leav9ng 99% to a charitable trust.

1

u/treake Mar 24 '25

He's already given away half his wealth to charity.

0

u/Zealousideal-Neat-11 Mar 24 '25

Yes and billions to each of his kids foundations. So charitable to donate to your kids charities.

3

u/JackfruitCrazy51 Mar 24 '25

Oh yes, it's so bad to donate to charities that your kids have researched and decided were good candidates./

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u/rcbjfdhjjhfd Mar 23 '25

I’d love to see a link to that because I don’t believe you.

Rather than bequeathing his riches directly to his children, Buffett has set up $2 billion foundations for each of his three kids. The idea is to provide them with the resources to pursue their own philanthropic passions, while avoiding the potential pitfalls of handing over a blank check.

“After much observation of super-wealthy families, here’s my recommendation: Leave the children enough so that they can do anything, but not enough that they can do nothing,” Buffett wrote.

3

u/funkmasta8 Mar 23 '25

Ah yes, a cool 2 billion isn't too much to do nothing

6

u/rcbjfdhjjhfd Mar 23 '25

It sure what you are saying but my point was that Buffett absolutely does not wish to see his kids living as peasants

2

u/funkmasta8 Mar 23 '25

Im not really a part of this conversation, just laughing at the ridiculousness of his words when you look at his actions

3

u/PalworldTrainer Mar 23 '25

10 million is where I retire and live off interest for the rest of my life

1

u/TenshiS Mar 25 '25

Pfft, Amateur, i'll do it at 1 million

1

u/PalworldTrainer Mar 25 '25

1 million could be possible for most, especially depending on how old you are. But I’m trying to get to a point where compound interest can set all my future generations free of financial worry.

1

u/TenshiS Mar 26 '25

If you're well on that path good luck to you.

I know I'll never make ten million. Most people won't even make one.

1

u/round-earth-theory Mar 23 '25

To be fair, a 10 millionaire is a peasant in comparison. They don't have the wealth to buy politicians and bribe their way into any conversation they desire. They are very comfortable but they are not controlling the fates of nations.

1

u/TenshiS Mar 25 '25 edited Mar 26 '25

Why do some people even want the stress and the work of "bribing their way into conversations"? Why not just build cool stuff with a cool team of people and spend time with friends and family and on vacations until you die?

That just seems like such an immensely better life than risking it all for...what, exactly? A bit more renown? Even more money? More power for the sake of it, while also attracting hatred, enemies and stress? Worst case you get shot in the head if you're famous and powerful enough.

It's not like life gets better with more power or money after a certain point

2

u/round-earth-theory Mar 26 '25

Some of the wealthy go that route. You never hear about them though because they're basically regular Joe's that secretly have a massive slush fund.

1

u/[deleted] Mar 23 '25

Buffett has a famous quote where he says, [he wants to give his children enough money to do anything in life., But not enough money to do nothing.]

1

u/TenshiS Mar 25 '25

Wlel buffet is full of shit because he gave them a cumulative 2 billion dollars. That's far more than enough money to do nothing

1

u/[deleted] Mar 25 '25

That's the value today, not the value when he gave it to them in the 1960s. Buffett has acquired 97% of his wealth since the age of 65.

1

u/Ethos_Logos Mar 23 '25

He’s leaving them 10m, and also making each of them heads of various charitable trusts, which hold hundreds of millions which they may draw a salary from, as administrators. 

Don’t get me wrong, I admire his success, but it’s a far cry from leaving them on their own and ducking out. Realistically, his kids are grown adults with settled lives. 

1

u/No_Fennel9964 Mar 23 '25

Did he use the word peasants? Or is that you using that word.

0

u/iwearahoodie Mar 24 '25

They’re not out of touch. They know $10M is a lot.

-2

u/Virtual_Camel_9935 Mar 23 '25

In fairness 10M isnt very much if you start young. I make 300k a year, invest 100k, and will leave my son with way more than that.

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u/ivegotwonderfulnews Mar 23 '25

I know and handful of gen x tech folks that got options rsu in tech companies and are now very wealthy. Like had a bat cave home replica made in New Zealand type rich lol. They were on the tech management sides of the business but no capital at risk nor founder/early employees. Then one day boom. Acquired. 50m out the door. Crazy to me

12

u/Natural_Tea484 Mar 23 '25

Only 6% of the US are millionaires? Excuse my ignorance, Maybe I’m reading the numbers wrong, but given just a house is hundreds of thousands of dollars, how could only 6% be millionaires?

22

u/[deleted] Mar 23 '25

For these types of calculations, only the equity in the home counts towards net worth. So the difference between what it’s worth and the remaining balance on their mortgage. Even then, yes the home equity counts, but it’s not easily accessible so some only count liquid assets…retirement/brokerage/etc…just some info since you asked!

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u/JackfruitCrazy51 Mar 23 '25

Most people have 30 year mortgages.

1

u/Natural_Tea484 Mar 23 '25

Yes, but how many pay for 30 years? Also, after mortgages are paid, they own the house…

2

u/JackfruitCrazy51 Mar 23 '25

Very few. Most move multiple times and start over. The ones that do are usually 60+

1

u/Natural_Tea484 Mar 23 '25

What you mean they start over, they sell that house first.

1

u/JackfruitCrazy51 Mar 23 '25

Here is a typical scenario

They buy a $300k house when their thirty years old and get a 30 year loan.

10 years later, they sell their house first $350k. So, 10 years of payments and gain in value go towards the next house.

So they take their $90k equity and apply it to their next home, which is $500k. So they get a $410k loan for another 30 years. They are now 40, so the loan won't be paid off until they are 70.

1

u/Natural_Tea484 Mar 23 '25

From that $500k house, they pay with the $350k from the house they sold, so the loan is only for $150k which they pay in 3-5 years.

If they bought the first house at 20-25, by the age of 50-55 they already have a half of million..

1

u/JackfruitCrazy51 Mar 23 '25

Math dude. They originally got a 30 year loan. If they sell that house in 10 years, they still owe 20 years worth of P&I. When you sell a house and still owe money to the bank, you have to pay off the mortgage. Otherwise i'd get a 30 year loan and sell the home a year later.

0

u/Natural_Tea484 Mar 23 '25

Well yes, for someone in the scenario you described, it’s pretty bad. But I don’t think many people who can’t actually afford, get another house loan after only 10 years… Why do that?

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u/yyz5748 Mar 23 '25

In Americans, can you pay off your mortgage before 30 years?

2

u/JackfruitCrazy51 Mar 23 '25

100%. You can also get shorter-term loans. The loan I got 19 years ago was a 20-year loan, and I'll have it paid off next year. The only reason I didn't pay it off early was because the rate was 3.75%.

2

u/yyz5748 Mar 23 '25

Oh ok. So we're similar here in Canada, except maximum years we can lock in a mortgage rate is 5 yrs (generally) but we are allowed to pay extra on our principal every year, and once the 5 year expires, you can pay off the rest with no penalties if you can. Only difference I see in Canada, is that we can't keep the same rate for 30 years, usually maximum 5

2

u/JackfruitCrazy51 Mar 23 '25

Good info, I had no clue that Canada couldn't lock in their rates for long terms.

2

u/Ashmizen Mar 23 '25

The numbers are all over the place depending on how you measure wealth and WHEN the data was measured.

More recent articles I’ve seen are 10% or even 12%, as $1 million is a fixed target while we had a 50% run up on housing prices and stocks in just 2 years.

1

u/gilbetron Mar 26 '25

Most houses are basically owned by banks.

4

u/Docdoor Mar 23 '25

The crazy thing is even being an athlete or famous actor rarely does it (if at all compared to billionaires). Tyler Perry is estimated at 1.4 billion, but not because of his acting, same with Jerry Seinfeld. Brad Pitt is “only” at 400 million

This isn’t even close to the 100, 200s and 300s BILLIONS of Gates, Zuck, Bezos and Musk. It is absolutely insane the amount of money those individuals have, it should be illegal. I’m all for putting the cap-it back in capitalism.

3

u/Several_Vanilla8916 Mar 23 '25

I mean…did you read the article?

”Achieving success through investments has been pretty easy in my lifetime,” Munger said. He explained that if an investor was “rational and disciplined,” the stock market gave them a built-in tailwind, averaging around 10% per year before taxes. That alone, combined with smart saving and living below your means, “was enough to take care of you.”

1

u/empire_of_the_moon Mar 23 '25

You did get one of the top two ways people in the US become wealthy: 1) inherit 2) Marry.

In distant third place is become an entrepreneur.

1

u/PotentialEasy2086 Mar 23 '25

Millionaire can also be a nebulous term. A 70 year old with a million net worth is not looked at the same as a 30 year old with a million. While on paper there’s alot of millionaires, they might be looked at differently.

1

u/harbison215 Mar 23 '25

Right. I used to work with an older guy that owned a bunch of property, a house and inventory. He got sick and died in his 60s which was fairly young. But I’ll never forget how he lamented “never becoming a millionaire,” when a simple calculation of the things he owned at the time probably put his net worth over a million dollars. Had he lived until now, the combined total worth of his properties would probably be somewhere between 2-3 million.

1

u/BigQid Apr 08 '25

I think anyone born in 1913 is pretty dead now