Just read a pretty fascinating summary on Warren Buffet’s early years, and almost spit out my coffee midway through.
Apparently at 25 years old he wanted to retire! And actually turned down a dream opportunity in order to do so!!
“The thing is, when I got out of college, I had $9,800, but by the end of 1955, I was up to $127,000. I thought, I’ll go back to Omaha, take some college classes, and read a lot—I was going to retire! I figured we could live on $12,000 a year, and off my $127,000 asset base, I could easily make that. I told my wife, “Compound interest guarantees I’m going to get rich.””
I feel like I had heard that before, but for some reason the “I was going to retire!” part escaped me. As well as the fact he was pretty confident screwing the 4% rule and trying to live off 10% of his assets, haha… But hey, he’s WARREN BUFFETT!
So what changed his fate?
“By pure accident, seven people, including a few of my relatives, said to me, “You used to sell stocks, and we want you to tell us what to do with our money.” I replied, “I’m not going to do that again, but I’ll form a partnership like Ben and Jerry had, and if you want to join me, you can.”
He set a few ground rules (mainly, no bitching about the ups and downs of the market) and before he knew it people out of the blue were sending him money to invest as well. This “partnership” formed what is now Berkshire Hathaway with $620 billion in assets with an annual average growth of 19.7%.
If you want a share in the company right now? $245,000. For ONE share. (“Class A” anyways, there’s now a “Class B” you can nab for $160.00 a pop – here’s the difference between the two).
The main thing he credits to the success? He was doing something he liked :) And 60 years later he’s still doing it!!
Now one wouldn’t naturally consider him “early retired”, what with him obviously still working and running a massive empire, but it was the freedom he gained through being financially independent that led him down this course in life. He doesn’t need all these extra billions of dollars he now has (he literally still coupons!!), but he chooses to spend his time on stuff that excites him.
And that’s the the part I admire the most. It’s not his businesses wizardry or his sharp mind, but the fact he got his personal finances in order which then set himself up to do whatever he wants in life. And at the age of 25 at that!
I highly encourage you to read this short piece on him – it’s really cool, especially as it’s in 1st person: Warren Buffett’s $50 Billion Decision
Here were two other notes I found interesting from it:
- When he found a mentor to look up to (Benjamin Graham – famous investor and author of The Intelligent Investor), he did whatever it took to stay in his shadows for maximum learning!
- He was perfectly content renting a house vs buying one. Stating to his wife, “I’d be glad to buy a house, but that’s like a carpenter selling his toolkit.” I didn’t want to use up my capital.” Not the exact reason I dislike home ownership myself, but still – I’ll take it :)
Lots of hidden gems in the article, and crazy to think how drastic one decision can make in your life. Not unlike Monday’s post on making the wrong call on boyfriends.
I’m thinking I may need to change my own mind on early retirement too… Screw blogging in my free time, anyone want to invest in the new J. Money Fund? Millions back guarantee, but no bitching if I lose it all!
Jay loves talking about money, collecting coins, blasting hip-hop, and hanging out with his three beautiful boys. You can check out all of his online projects at jmoney.biz. Thanks for reading the blog!