How Warren Buffet Became Rich


How Warren Buffet Became Rich

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Early days of working and saving
Warren Buffett has been obsessed with money since he was a young child.
He made money in several ways when he was a kid, including by working regular jobs. He delivered newspapers for many years and also worked in his grandfather’s grocery store.
Buffett even started some small businesses as a kid. One example is when he bought a used pinball machine for $25 and set it up in a barbershop and split the profits with the owner.
A week later, he had made enough money to buy a second machine. After a while, he had many pinball machines all over Washington, D.C. where he lived at the time.
At this time, he started an investment partnership that ended up becoming the single biggest contributor to his enormous wealth.
His investment partnership started with just a few family members and close friends, but he ended up running several partnerships with many more investors.
In exchange for managing people’s money, Buffett got a cut off the profits. This is similar to how hedge funds work today, the manager charges a commission and gets a percentage of the profits.
The money invested in Buffett’s partnerships grew so much that his cuts of the profits ended up making him very rich.
His net worth was over $100,000 when he started the partnerships. But when he closed them down 13 years later in 1969, his net worth had increased to $25 million.
At 38 years old, he was worth $25 million. That is equal to about $181 million in today’s dollars when adjusted for inflation.
His early gains from the partnership explain a lot about his massive wealth today. Compounding $25 million for 50 years will obviously lead to enormous amounts of money.
Keep in mind that many of the people who invested in Buffett’s partnership also became very rich. It was immensely profitable for all parties involved.
Buffett invests through Berkshire Hathaway
After dissolving his investment partnerships in 1969, Warren managed most of his investments through Berkshire Hathaway. He owned Berkshire, while Berkshire owned the investments.
The textile business never recovered and eventually closed down. Because of this, Buffett has often joked that buying Berkshire was his worst investment.
However, Berkshire became a huge success under Buffett’s management. He transformed it into a conglomerate of many different types of businesses.
Warren Buffett remains the CEO of Berkshire to this day, and his best friend and long-time investment partner Charlie Munger is the chairman of the board.
Berkshire also owns many other insurance companies, lots of energy companies and utilities, and several clothing companies, to name some examples.
Many of those who invested in Berkshire early on ended up becoming incredibly wealthy, just like those who invested in Buffett’s investment partnerships.
In some respects, Buffett won the “ovarian lottery” — he was lucky to be born to good parents, in a prospering country (the US) and becoming an adult during a time of enormous economic growth.
In other words, a lot of Warren’s success is due to luck. He even admits this himself. If he had been born in a third-world country to parents with no education, Buffett would not have become what he is today.
But Warren also has unique talents and an incredible work ethic. He often worked from morning until evening reading books and financial reports.
At a time in his career, he had detailed knowledge of pretty much every publicly traded company in the US. His reading and studying gave him the edge he needed to outperform other investors.
What is Warren Buffett doing today?
Warren Buffett is now 89 years old. He is still the CEO of Berkshire Hathaway and still manages a lot of its deals and investments.
However, he hasn’t been able to make any major acquisitions in recent years because valuations have been high. So, his current strategy seems to be hoarding cash and waiting for buying opportunities.
Buffett has also spent quite a bit of money and effort on philanthropy in recent years. He has given billions of dollars to the Bill & Melinda Gates Foundation and pledged to give the foundation 99% of his fortune after he passes.

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