My dad similar to Warren Buffet who started from nothing, and he is considered to be wealthy today; however I don’t see his wealth as my success. I believe in building my own scorecard and fortune just like my dad and Mr. Buffett, and I would not be upset if my parents decide to give away their wealth to charity later on. I mean, after all, I believe that their wealth is theirs and I don’t want them to feel obligated. However, if my dad let my brother and me to inherit his business legacy, I would still continue to expand his wealth. It would be better for me and my brother to grow the wealth since my dad has already built the tree for us which gives a tremendous head start. However, towards the future, if I become really wealthy, I might pledge to give away up to 50% of my wealth to charity after my death. Anyways let’s not get distracted about me being philanthropy; I’m still far from being in the 1% list! Let’s go back to the topic of Warren Buffett. After understanding the stories of his success and the amount of wealth he accumulated, you readers might wonder how on earth he does it. I myself was curious about how Warren Buffett did it. After doing many bibliography studies and research about him, I learned how Warren Buffett became successful and wealthy therefore I’m here to share his stories with you guys.
Start from a Young Age
Warren E. Buffett has always been inspired with numbers and business since childhood. It’s as if he has it in his blood. Even when he was given allowance from his parents during his childhood, he always wanted to earn his own so that he could have more than the allowance that he received. At the age of 6, Warren Buffett has already started figuring out to make money. He made his first sales selling pack of chewing gum and climb up to selling sodas to his friends at school. He bought them in wholesale at cheaper price in order to sell pieces of them at a higher price giving him some profit. By age 11, he remembered purchasing his first stock. His father owned a small brokerage, and he spent his time watching and listening what investors were doing. Moreover, Warren Buffet loves reading and has been continuing reading as his hobby till today. One of his favorite books during his adolescent was “One Thousand Ways to Make $1000”. This book is full of brilliant ideas on how to make money through excellent salesmanship, hard work and resourcefulness. Most importantly, the book has taught little Warren the Power of Compound Interest, and inspired him to pursue many simple business ventures at young age. He mentioned that he would kill himself if he was not a millionaire before the age of 30.
Warren was so motivated to work tirelessly at various ventures such as collecting refund from recycling soda bottles, washing cars, delivering newspaper and selling lemonade. He used the saved up from all the hustle to purchase used pinball machines that he and his partner placed in different local stores. They asked the local stores if they were able to place their machines in their location in exchange for half the profit. Within a week, Warren had enough money to buy more pinball machines, which he then negotiated with another local store. He was always figuring out how to make money, save and reinvest his money, building a small empire before he was even an adult. By the time Warren was 16 years old, he has accumulated a net worth of $6000, and that’s equivalent to $53,000 if compared to today’s term (2019). He continued to add to what he had already had, until he accumulated a small fortune. Years later, he used the money he had saved up to invest and build the empire he has today.
Warren had started to work hard and had invested his money
at a very young age. This gave him the advantage to build great wealth. You
readers especially the young ones who are reading this article should use this
lesson as a foot step that the earlier you start working and building wealth
through investment the better result you will have. The power of compound interest makes the small amount of wealth similar to the small snow ball rolling
down the hill that eventually become a bigger and bigger snowball. So don’t
waste your time on nonsense things and start being productive if you want to be
successful and wealthy like Warren Buffett.
Meeting His Mentor
Young Warren initially did not want to attend college. It was his father that persuaded him to continue his education after high school. He first attended University of Pennsylvania where he kept complaining that he knew more than his professors. So he then transferred to the University of Nebraska, where he graduated with a degree in business in three years at the age of 19. Warren later wanted to continue his education, so he applied to Harvard but was rejected. But don’t get the wrong idea, I think Warren being rejected to Harvard was the luckiest thing that happen to him. Warren later came across a book called “The Intelligent Investor” by Benjamin Graham, and realized that the author was a professor in Columbia University. It was because of this real find; he decided to enroll to Columbia University where he met his mentor Benjamin Graham, who would be his mentor and professor. Benjamin Graham is known to be “the father of value investing”. He utilized the stock market for himself and his clients to make more money without risk. He created many principles on how to invest safely which principles are still being used today by many modern value investors such as Warren E. Buffett himself. I believe Warren Buffett being able to meet his mentor was a key to his success. Without him being able to meet his mentor, he wouldn’t be the greatest investor we know today.
Young Warren initially did not want to attend college. It was his father that persuaded him to continue his education after high school. He first attended University of Pennsylvania where he kept complaining that he knew more than his professors. So he then transferred to the University of Nebraska, where he graduated with a degree in business in three years at the age of 19. Warren later wanted to continue his education, so he applied to Harvard but was rejected. But don’t get the wrong idea, I think Warren being rejected to Harvard was the luckiest thing that happen to him. Warren later came across a book called “The Intelligent Investor” by Benjamin Graham, and realized that the author was a professor in Columbia University. It was because of this real find; he decided to enroll to Columbia University where he met his mentor Benjamin Graham, who would be his mentor and professor. Benjamin Graham is known to be “the father of value investing”. He utilized the stock market for himself and his clients to make more money without risk. He created many principles on how to invest safely which principles are still being used today by many modern value investors such as Warren E. Buffett himself. I believe Warren Buffett being able to meet his mentor was a key to his success. Without him being able to meet his mentor, he wouldn’t be the greatest investor we know today.
Having to meet the right mentor, Warren was able to analyze
and pick the right stock for his investment using value investing technique. He
mentioned that Graham was the one that taught him “the two rules of investing”
which first rule is not to lose money,
and the second rule to not forget rule
number one. In addition, Warren learned that owning a stock means you own a
little portion of the company. This gives Warren a different perspective in
viewing a company stock. He no longer sees the stock price fluctuation as bad
thing but as an advantage of owning portion of the company when the value of
the stock is trading in discount. This enables him to analyze the value of
company through the financial statement and applying financial metrics to
evaluate a company margin of safety. Applying this technique allowed Warren to
only invest in companies that are not overpriced.
Entering the
Investment Field
After graduating for Columbia University, Warren had been working as an investment salesman. He first was denied to work for his mentor. However, he eventually was called by Benjamin Graham to work for him. Warren immediately went to New York without even asking the salary since he idolized his mentor so much. Warren Buffett learned a lot from his mentor just by working with him every day.
After graduating for Columbia University, Warren had been working as an investment salesman. He first was denied to work for his mentor. However, he eventually was called by Benjamin Graham to work for him. Warren immediately went to New York without even asking the salary since he idolized his mentor so much. Warren Buffett learned a lot from his mentor just by working with him every day.
After mastering the skills he had learned from his mentor,
Warren decided to open up partnership with his close friends and family. The
partnership had certain restriction where Warren himself would invest only $100
and, through re-invested management fees, Warren would grow his stake ownership
in the partnership. Warren would take half of the partnership’s gain over 4%
and would repay the partnership a quarter of any loss incurred. Warren
continued opening new investment partnership since he made good tracking record
performance with his investment techniques. He applied value investing
technique that he learned from his mentor to purchase undervalue company in the
stock market. By 1959, Warren Buffett had seven partnerships opened and had a 9.5%
stake in more than a million dollar of partnership assets. Three years later,
Warren who was 30 years old at that time became a millionaire and decided to
combine the partnerships into one single entity. Warren E. Buffet had reached
his childhood dream of becoming a millionaire at the age of 30, but this
doesn’t stop Warren Buffett. He continued seeking new ventures, and found an
opportunity to invest in a New England textile company called Berkshire
Hathaway, and Warren gradually shifted the primary business’s focus to become a
holding company that acquire many different companies. Today Berkshire Hathaway
is a multi-billion dollar holding company that owns many businesses.
Lives Modest Life
Style
Warren Buffett has always been a humble business man. Even after he became wealthy long ago, he didn’t change much of the way he live his life. He lives in the same home he purchased before he was wealthy and drives a modest car. His house is only 6,570 square feet that has five bedrooms and two bathrooms. Most people who became rich would want to purchase luxury toys that they can show it off to people. However, Warren didn’t buy lavish materialistic things like fancy cars, luxury mansion, big yachts with a helipad on it, or anything that require huge expenses to upkeep those things. He enjoys activities that don’t require much cost. He spends nearly 80% of his time reading, and analyzing stocks. And during his free time, he spends 8 hours a week playing the game bridge. He enjoys the challenges that the game of bridge presents. I believe Warren’s modest life style enable him to acquire the fortune he built since young. Having not much assets that depreciate in value and high upkeep expenses enable him to get richer and richer. He doesn’t find interest in those hobbies like many other rich people would. Instead, he enjoys building his holding company to grow bigger using companies stocks that he acquires. He mentioned that Berkshire Hathaway is like an art, a canvas that he can enjoys painting every day.
Warren Buffett has always been a humble business man. Even after he became wealthy long ago, he didn’t change much of the way he live his life. He lives in the same home he purchased before he was wealthy and drives a modest car. His house is only 6,570 square feet that has five bedrooms and two bathrooms. Most people who became rich would want to purchase luxury toys that they can show it off to people. However, Warren didn’t buy lavish materialistic things like fancy cars, luxury mansion, big yachts with a helipad on it, or anything that require huge expenses to upkeep those things. He enjoys activities that don’t require much cost. He spends nearly 80% of his time reading, and analyzing stocks. And during his free time, he spends 8 hours a week playing the game bridge. He enjoys the challenges that the game of bridge presents. I believe Warren’s modest life style enable him to acquire the fortune he built since young. Having not much assets that depreciate in value and high upkeep expenses enable him to get richer and richer. He doesn’t find interest in those hobbies like many other rich people would. Instead, he enjoys building his holding company to grow bigger using companies stocks that he acquires. He mentioned that Berkshire Hathaway is like an art, a canvas that he can enjoys painting every day.
I’m pretty amazed of Warren Buffet’s character. Even with
such wealth, he still sticks to his principles and doesn’t have the temptation
to purchase cool luxury things. If I were a billionaire, I think I would have
spent some of the money on luxury toys and expensive hobbies. But I guess
Warren enjoys doing the things he does every day. He mentioned that every day going
to work feels as if he is tap dancing and recommend others to pick the job that
one is passionate about.
In Conclusion
From this article I just shared, I hope you readers now understand the background to Warren Buffett’s success and wealth. He had worked hard acquiring wealth at such a young age that made him the person he is today. I believe anyone can replicate some part of his methods to building wealth. It’s not an easy task since some might argue that living frugally like Warren Buffett is impossible. A person who is wealthy would eventually be tempted to do some expensive hobbies or activities. Moreover, majority people would like to value quality experiences in life before they passed away. I understand people don’t want to miss out in life just by working and investing all the time. I know there are many other valuable experiences out there besides success and wealth. There is a saying that money doesn’t buy happiness, however I believe just applying some of his strategies can help an average person be wealthy and have a comfortable life. You don’t have to replicate the way he live his life, but applying some of his methods to your life could do good to your financial goal. Starting early career, modest life style and discipline investing could compound to great wealth if your goal is to have financial freedom and early retirement.
From this article I just shared, I hope you readers now understand the background to Warren Buffett’s success and wealth. He had worked hard acquiring wealth at such a young age that made him the person he is today. I believe anyone can replicate some part of his methods to building wealth. It’s not an easy task since some might argue that living frugally like Warren Buffett is impossible. A person who is wealthy would eventually be tempted to do some expensive hobbies or activities. Moreover, majority people would like to value quality experiences in life before they passed away. I understand people don’t want to miss out in life just by working and investing all the time. I know there are many other valuable experiences out there besides success and wealth. There is a saying that money doesn’t buy happiness, however I believe just applying some of his strategies can help an average person be wealthy and have a comfortable life. You don’t have to replicate the way he live his life, but applying some of his methods to your life could do good to your financial goal. Starting early career, modest life style and discipline investing could compound to great wealth if your goal is to have financial freedom and early retirement.
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