I was a late bloomer. I didn’t get seriously interested in investing until my last semester of college. That summer, I worked on campus at the school of business and one of the professors often touted the life and works of Warren Buffett, a billionaire investor from Omaha.
Each year the professor took groups of students to annual meetings of Berkshire Hathaway, the company Buffett still runs today.
I was interviewing the professor for an article that would appear in one of the business school publications to donors, and he encouraged me to read every annual letter Buffett penned to shareholders. He told me those letters contained as much business knowledge as a formal business school education.
I did exactly that. That summer I read each letter Buffett wrote to Berkshire Hathaway shareholders. All 28 of them. Plus, I found some letters he composed to co-investors of several investment partnerships that he managed in the 1960s.
I’ve been a big fan of Buffett ever since. I put him on a pretty high pedestal.
As you grow older, you realize everyone is human, however. So, while I still respect Buffett’s business and investing acumen, there are certainly aspects about his life that don’t impress me. He wasn’t an engaged father. He had an unconventional arrangement with his first and second wives. And I’m sure there are plenty of social policies about which he and I would disagree.
All that said, I still think he is worthy of immense respect. So I try to consume as much as possible of what he says and writes.
Buffett recently wrote a letter to Berkshire Hathaway shareholders in which he shared his philosophy on making philanthropic gifts. The letter also contained a nugget of information that revealed his secret to building incredible wealth.
In the letter, while describing the advantages he had in life, starting with his luck of being born in the United States, Buffett wrote, “…the real action from [wealth building] takes place in the final twenty years of a lifetime.”
Buffett penned that line at age 94.
So, to paraphrase, Buffett witnessed the “real action” of accumulating wealth after he turned age 74. Living a long life was an important part of Buffett’s ability to build his fortune. Sure, he was wealthy long before he turned 74, but the investment compounding train became totally unstoppable for him after that point.
Even Buffett found it difficult to comprehend how his financial life has unfolded. He wrote in the same letter, “…in no way did I, or anyone else, dream of the fortunes that have become attainable in America during the last few decades. It has been mind-blowing – beyond the imaginations of Ford, Carnegie, Morgan or even Rockefeller. Billions became the new millions.”
If you study his life, Buffett had five factors to his staggering success. They are as follows: (1) Start saving at a young age and never stop, (2) Live below your means, (3) Invest aggressively but intelligently, (4) Avoid big investment mistakes that create financial losses, and (5) Live a long time.
Of those five, Buffett specially called out the last one, living a long time, as paramount to his financial success. He was a master of the other four factors, too, but without the good fortune of good health, he couldn’t have accumulated the “mind-blowing” sums of wealth he possesses today.
Nor could he be in the fortunate position to give away billions of dollars to charities each year.
But you don’t have to accumulate billions to be considered financially successful. Buffett’s wealth shouldn’t be your barometer for success. That being said, you can learn from his success. If you desire to grow your wealth, follow the five steps he lived out.
And hopefully you are blessed with his good health, too.
Comments