Warren Buffett, who turns 91 on August 30, is a billionaire at a time when outrage over the excesses of extreme wealth is growing (along with the fortunes of many of these billionaires).
But based on what I learned about him while becoming a financial scholar and portfolio manager, Buffett is a role model for his ultra-wealthy peers.
He has donated half of his vast fortune to charity and plans to continue to do so with most of the rest during his lifetime or after his death.
Buffett also lives largely a modest lifestyle by billionaire standards; he still resides in the spacious home he bought six decades ago.
“My needs are simple”he explained in June 2021. “What made me happy at 40 makes me happy at 90.”
Their first steps
This investor was born in 1930 when the Great Depression started.
He showed a nose for business at a very young age, long before he became one of the richest people in the world.
By March 2021, Buffett’s net worth had exceeded US $ 100 billion.
While still in elementary school, the businessman known as the “Omaha Oracle” bought packets of Wrigley gum and bottles of Coke at his grandfather’s store that he then resold in his neighborhood for a profit.
At just 11 years old, he bought his first shares.
As a teenager, he established a large newspaper route and, with a friend, invested in pinball machines that they put up in barbershops, splitting the profits with the store owners.
At the age of 15, he had already bought 40 acres of farmland in the state of Nebraska, United States, with the proceeds of previous commercial projects.
How did you build your heritage?
Shortly after completing his graduate degree at Columbia University, Buffett worked for his mentor, the investment legend. Benjamin Graham, in New York City.
When Graham retired from the investment business, Buffett returned to his hometown of Omaha and ran a series of successful hedge funds, known as Buffett Partnerships.
In the late 1960s, Buffett viewed the stock market as overvalued and had the integrity to return capital from his investors, closing his original investment business.
Then Buffett took over Berkshire Hathaway, a textile manufacturer in trouble. He eventually made it his main commercial activity.
Over several decades, Buffett made the company the conglomerate it is today, with annual sales of US $ 245 billion and a market capitalization of $ US654 billion.
Employs approximately 360,000 people through its many subsidiaries.
The skyrocketing rise in Berkshire shares and the aforementioned Buffett companies enriched thousands of people.
Aware of his long-term interests and age-related health risks, he recently appointed Greg abel as its long-term successor.
Still, Buffett has not indicated his intention to withdraw from Berkshire Hathaway. His shares won around the 25% in the first eight months of 2021.
Life on its own terms
Buffett learned much of his philosophy from his father, Howard Buffett, a conservative Republican and stockbroker who spent eight years in Congress.
Buffett describes this philosophy as following his “inner command.” Basically, it involves living life on your own terms and not worrying about what others think or trying to “keep up with the neighbors.”
Consequently, Buffett doesn’t fit perfectly anywhere, exhibiting characteristics that just about everyone likes or dislikes.
He says he is a Democrat, but over the years he has voted and donated money to both Democrats and Republicans.
He is not religious and describes himself as agnostic. His late wife and the foundation that bears her name (Susan Thompson Buffett Foundation), were and are substantial supporters of reproductive rights organizations that favor access to legal abortions.
Warren Buffett spent more than 20 years considering himself happily married to Susan, who spent his last years in San Francisco. But after his death in 2004, Buffett married Astrid Menks in a small, informal ceremony.
Share and care
With Bill and Melinda Gates created “The Giving Pledge”, through which billionaires pledge to donate at least half of their fortunes to charity.
But Buffett goes beyond that: “More than 99% of my wealth will go to philanthropy during my lifetime or when I die,” he promised.
Rather than establishing his own foundation, he has invested his charitable money in five other-run foundations, most notably that of Bill and Melinda Gates, of which he served as a trustee until 2021.
Upon resigning, Buffett began to leave all the corporate boards to which he used to belong because his “physical participation was not necessary in any way.”
The businessman assures that he has given very little money to his three children, Howard Graham, Peter and Susan Alice Buffettplus hundreds of millions of dollars for the foundations each runs
Buffett expresses his generosity in other ways, too.
For example, she is one of the strongest advocates of women in business in American companies. He was a mentor to Tracy Britt Cool for over a decade when she went from financial assistant to CEO of Pampered Chef, a Berkshire subsidiary. In 2019 he started his own private equity firm, following the Berkshire model, with the support of Buffett.
Buffett began sharing his knowledge of financial markets and the economy in 1977 in his widely read letters to shareholders. Its annual shareholder meetings, known as “ Woodstock for capitalists “They are similar to a Disney vacation for thousands of families each year.
Many of his media appearances have also been archived for all to see and learn.
Buffett also voluntarily met with dozens of college students over decades about eight times a year for a question-and-answer session and a tour of their businesses.
I personally attended several of these sessions in Omaha with my students. That experience inspired me to write a book on Buffett with my teenage son.
The “Buffett rule”
Buffett openly admits that he has benefited from a system that allows billionaires to pay very low tax bills, in part because it taxes income rather than wealth.
He is famous for having regretted paying a lower tax rate than his secretary.
For years he advocated the so-called “Buffett Rule”, a minimum tax of the 30% on those who earn more than $ 1 million a year to remedy the problem. But the United States Congress rejected it in 2012.
Buffett also acknowledges that the wealthy pay less in taxes when they deduct what they give to charities from their taxable income, while questioning whether that’s a problem.
“I believe the money will be of more use to society if it is spent philanthropically than if it is used to slightly reduce a steadily increasing US debt,” he said in response to ProPublica’s reports of low taxes on billionaires.
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Undoubtedly, the value of a tax system that encourages billionaires to give away money rather than to Internal Revenue Service is open to debate. But I admire your generosity and business acumen.
“After much watching from super rich families, here is my recommendation,” Buffett said in an update on his charitable giving:
“Leave your children enough so that they can do anything, but not enough that they can do nothing.”
*John M. Longon is a professor in the Department of Finance and Economics at the Rutgers School of Business and a director of investments and portfolio manager for Beacon Trust, an investment advisor. This note originally appeared on The Conversation and is published here under a Creative Commons license.
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