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Charlie Munger wasn’t known for mincing words, and that was never more true than in 2019, when at the Daily Journal Annual Meeting, he received a pointed question about his wealth that made the crowd laugh.
“In spite of being partners for so long, why is Warren so much richer than you?” the audience member asked, referring to Warren Buffett’s $82.5 billion net worth (1) compared to Munger’s $1.6 billion (2) at the time.
“Well, he got an earlier start, he’s probably a little smarter, he works harder — there are not a lot of reasons,” Munger laughed.
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His quick wit also made an appearance, immediately adding, “Why was Albert Einstein poorer than I was?”
As the vice chairman of Berkshire Hathaway for 45 years until his death in 2023, Munger was second in command at Buffett’s investing empire.
Here’s how the Oracle of Omaha got his start, where his wealth stands today and what it could mean for your portfolio.
How Warren Buffett built his billions
While Munger’s net worth reached $2.5 billion before his death, Buffett’s wealth currently sits at $148.3 billion — almost double what it was back in 2019 when Munger was asked about the disparity.
While Berkshire Hathaway’s operations might be complex, Buffett’s investing tenets are very simple.
Start young — the younger, the better. Buffett invested for the first time at age 11, which allowed for more decades in the market compared to the average investor.
That extra time contributes to the most potent part of investing: compounding.
The power of compound interest only really starts to show up once you’ve been in the market for some time, or once you’ve reached a significant milestone — like the $100,000 benchmark Munger is often cited for emphasizing. (3)
But most people probably don’t understand how to invest at the age of 11.
That said, it’s never too late to get started, and small amounts invested early can turn into big numbers once compounding does the heavy lifting.
Platforms like Acorns can make investing early easy — even if you’re a newbie investor — by investing the extra change on any purchase you make.
This is how it works: If you purchase a snack for $5.30, Acorns will round up the price to $6.00 and invest the 70-cent difference. Throughout the year, all this extra change on your daily purchases can snowball into a sizable investment, with zero work on your end.
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Buffett also believes it’s essential to find undervalued smaller companies to invest in, as he initially built his wealth on small-caps like furniture and candy stores.
“I probably would be focusing on smaller companies because I would be working with smaller sums and there’s more chance that something is overlooked in that arena,” he said during a 1999 shareholder meeting. (4)
Read more: How much cash do you plan to keep on hand after you retire? Here are 3 of the biggest reasons you’ll need a substantial stash of savings in retirement
While his strategy is proven to work, it’s not always easy to keep up with the ever-changing market. If your 9-to-5 doesn’t revolve around monitoring the stock market, you might feel overwhelmed trying to find that next undervalued business to invest in.
Moby helps make this process easier by finding these companies and consolidating all the research for you in one place.
The platform lets you make smarter financial decisions by providing tailored, data-driven insights on various companies. It can help you navigate these complex markets and make informed investing decisions.
All this info is then wrapped up in three weekly hand-picked investment opportunities, delivered straight to you.
Moby’s technology can also integrate seamlessly with many of your favorite financial tools, providing accurate recommendations, analysis and financial planning assistance.. They also offer a 30-day money-back guarantee so you can try before you buy.
Buffett also believes in the importance of investing within your circle of competence — meaning sticking to that which you already know and understand. The majority of his wealth comes from two areas he is exceptionally competent in: financial services and consumer goods.
If you want to expand your own circle of competency, it might be worth working with an advisor whose expertise is in a different area than your own.
If you’re not sure where to find a qualified advisor, consider Advisor.com. All you have to do is answer a few quick questions and provide your ZIP code to be matched with the best potential advisors for your needs.
Book a no-obligation call with your favorite picks to find the right advisor for you today.
How Charlie Munger reached billionaire status
While Munger’s wealth never came close to Buffett’s $100+ billions, he was still a billionaire, which is a level of wealth reserved for the privileged few.
His early success came from focusing on real estate, where he earned his first million, before he ever began investing in the stock market. (5)
Real estate investing can feel overwhelming. Being a landlord is not for the faint of heart, but that doesn’t mean you can’t tap into Munger’s strategy and use real estate to grow your wealth.
If you’re interested in investing in real estate, but not ready for the commitment of managing a property on your own, Arrived can help you enter the market.
Backed by world-class investors like Jeff Bezos, Arrived lets you invest in shares of vacation and rental properties, creating a passive income stream that avoids midnight maintenance calls and burst pipes.
To get started, just browse their selection of properties, all vetted for appreciation and income generation potential. Once you choose a property, you can start investing with as little as $100 to see if Arrived is right for you.
Arrived also offers a secondary market for selling your shares with a full rollout of properties slated for November. This can give you more flexibility to move money around, especially when compared to managing a mortgage.
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Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
Forbes (1), (2); Yahoo Finance (3); YouTube (4); Andrew Faber (5)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.