Lessons on Smart Investing and Rich Living from Charlie Munger
On November 28th, Berkshire Hathaway Vice Chairman Charlie Munger died at age 99. Munger and his partner, Warren Buffett, became billionaire sages whose words reverberated throughout the markets. Their appearances at Berkshire's annual shareholder meetings were appointment viewing for many financial professionals. And while Charlie's "Mungerisms" often served as a succinct counterpoint to Buffett's more loquacious commentaries, the two were almost completely in sync on how they thought about work, investing, and philanthropy.
On today's show, we reflect on the lives and legacies of these two business icons and discuss what lessons investors and seniors can learn from their phenomenal success.
1. See the big picture.
One valuable “Mungerism” all investors should take to heart is, "The big money is not in the buying and the selling but in the waiting." Munger and Buffett believed that focus, discipline, and patience were keys to successful investing. They excluded the emotions that can swirl around the day-to-day, minute-by-minute movements of the markets from their decision-making.
They even stuck to those principles during the pandemic, as Berkshire Hathaway suffered $50 billion in losses. While many nervous and inexperienced investors tried to "gamify" volatile markets with risky timing strategies, Munger and Buffett kept diversifying and investing in "wonderful companies." Their losses during the pandemic may be unfathomably huge to the average investor. But, as market history shows time and time again, those losses were temporary because Munger and Buffett kept following a solid plan, no matter what was happening in the world.
2. Love what you do.
Munger and Buffett's partnership lasted over 60 years and likely would have continued for a few more -- despite the fact that both were billionaires a couple of times over who could have retired whenever they wanted! While the succession plan for Berkshire Hathaway has been a constant source of speculation for years, Munger was still actively involved in the company at the time of his death. He loved what he did and kept doing it for as long as he could.
Perhaps one secret to Munger's incredible longevity is another thing that he and Buffett shared: a lifelong commitment to learning. Both men considered reading an essential part of their daily routines, and Munger once said, "You could hardly find a partnership in which two people settle on reading more hours of the day than in ours.”
Today, most seniors are going to land somewhere in between the old retirement at 65 model and "dying with your boots on" like Munger. But whether your goal is to stop working for good or explore new challenges through multiple stages, devoting yourself to things you love doing and trying to broaden your horizons a little bit more every day can make your golden years more exciting and more fulfilling.
3. Leave something bigger behind.
Warren Buffett and Bill Gates founded The Giving Pledge, a charitable campaign encouraging wealthy folks to leave most of their money to philanthropic causes. Some noteworthy signers include Mark Zuckerberg, Michael Bloomberg, MacKenzie Scott, and George Lucas.
Charlie Munger, however, quipped that he couldn't sign The Giving Pledge because, "I have already transferred so much to my children that I've already violated it. I can't join them. It's like coming back from the dead."
Still, during his lifetime, Munger donated more than $500 million, with a focus on higher education and student housing that connected his interest in architecture with his philanthropic goals. He also believed that supporting his children honored his late wife. Munger and Buffett may have had different ideas about how to give back, but they both made enormous impacts in ways that suited their personal interests and values.
And that might be the biggest lesson we can all take away from Charlie Munger’s extraordinary life and career: he stayed true to who he was and what he believed. Munger was a billionaire who lived in the same house for 70 years because it made him happy; the Vice-Chairman of a multinational conglomerate whose investment strategy was always straightforward, and a philanthropist who focused on causes and people that were important to him.
Comprehensive financial planning could help you spend more of your time doing what matters the most as well, no matter how big your nest egg is. Let’s prep for 2024 by discussing the sound financial principles we believe in at Keen Wealth and your vision for a successful retirement.
About Bill
Bill Keen is a financial advisor with nearly 30 years of industry experience. As the founder and CEO of Keen Wealth Advisors, a registered investment advisory firm, he focuses on providing personalized retirement planning designed to help people thrive before and during their retirement years. With a passion for educating others, Bill regularly blogs about retirement planning, hosts the podcast Keen on Retirement, and has contributed to Forbes, U.S. News and World Report, Reuters, Wall Street Journal’s Market Watch, Yahoo Finance, and other publications. Based in Overland Park, Kansas, Bill and his team work with clients throughout the greater Kansas City area and across the nation. To learn more, connect with him on LinkedIn or visit www.keenwealthadvisors.com.
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