Yahoo Finance 11 Financial Milestones Warren Buffett Had Throughout the Years To Build His Fortune
Warren Buffett, also known as the Oracle of Omaha, is renowned for his stock market insights and his wealth. One of the richest people in the world, Buffett’s net worth is estimated at $130.2 billion, as of July 10. His main business, Berkshire Hathaway, is valued at $876 billion, and its Class A shares are the most expensive in the world.
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So how did Buffett make his billions? Born into a middle-class family in Omaha, Nebraska, Buffett started working at a young age. Through patience, frugality and dedication, he eventually became one of the wealthiest people in the world.
Whether you’re interested in becoming a self-made millionaire or simply curious about Buffett’s unusual life, the tale of this self-made billionaire is worth learning about. This article will take a deep dive into some of the major milestones in Buffett’s financial life. We’ll get started when he was just a boy in Omaha.
1930: Warren Buffett Is Born in Omaha
Warren Buffett was born in Omaha on Aug. 30, 1930. His parents, Howard and Leila Buffett, married in 1925 and had three children: Warren; Warren’s older sister, Doris; and Warren’s younger sister, Roberta.
Warren’s father was a stockbroker who later became a Republican congressman. A fiscal conservative, Howard Buffett was a strong supporter of the gold standard. In fact, he ran for Congress on that platform. He was elected to Congress in 1943.
When Warren was 12, the family left Nebraska and moved to Washington, D.C. Buffett became rebellious after the move. “I fell in with bad people and did things I shouldn’t have,” he later said. “I was just rebelling.”
His grades slipped, he ran away from home and he even stole sporting goods from a Sears store. Buffett finally straightened himself out when his father threatened to make him give up his paper route.
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1942: Buffett Makes His First Stock Purchase
Warren Buffett’s fascination with the stock market started at an early age. By the age of 9, he was routinely following the market’s ups and downs in the newspaper. That focus served him well in his career as an investor, of course.
Buffett bought stock for the first time at the age of 11. The young Buffett scraped together his cash and used it to buy three shares of Cities Service.
“I bought my first stock in 1942, in the summer of ’42,” he told PBS. “I was 11 years old. …. And I have never known what the market’s going to do the next day. And that’s not my game.”
Buffett learned a lot from that first stock purchase, it seems. He bought the stock for $38 a share and then got spooked when its value plummeted. He sold the shares when they rose back up to $40 apiece, only to see their value increase afterward.
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1944: Buffett Files His First Tax Return
Buffett filed his first tax return when he was just 14 years old. He had earned money with a paper route, delivering both the “Washington Post” and the “Washington Times-Herald.” The Oracle of Omaha told PBS that his route included six senators and one Supreme Court justice.
The 14-year-old Buffett earned $592.50 in 1944, which meant he was required to file a federal tax return. He paid $7 in taxes. Buffett also claimed expenses on his return: bicycle costs totaling $35, and $10 for watch repairs.
1946: Buffett Builds His First Small Business — a Pinball Empire
As a teenager, Buffett was always on the lookout for new, creative ways to earn money. One of his earliest business schemes involved the wildly popular game of pinball.
In 1946, the 16-year-old Buffett spent $25 buying a pinball machine, which he placed in a barbershop in Washington, D.C. The pinball machine was a hit, and Buffett soon began buying more machines. He later told his friend Bill Gates that he had “built a small empire” out of that first pinball machine.
“It was the best business I was ever in,” he added wryly. “I peaked very early in my business career.”
1950: Buffett’s Business Reaches $9,800
By the time he turned 20, Buffett had amassed $9,800 with his pinball business. That’s $130,973.46 when adjusted for inflation.
At his father’s suggestion, Buffett enrolled in the University of Pennsylvania’s Wharton School of Business. But Buffett, who was homesick for Omaha, said he never felt comfortable at the University of Pennsylvania.
“I didn’t feel I was learning that much,” he later said, adding, “Nebraska called, Wharton repelled.”
Buffett then transferred to the University of Nebraska and finished his undergraduate degree there.
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1956: Buffett Opens His First Investment Partnership, Buffett Partners
At the age of 25, Buffett moved back to Omaha and opened his first investment firm, Buffett Partners. At the time, Buffett had a personal net worth of $140,000. The partnership began as a modest venture. Investors included his father-in-law, his sister Doris and his aunt Alice. Buffett himself invested just $100 in the venture.
The initial investments in Buffett Partners totaled $105,000. Buffett charged his customers a fee of 50% for all earnings above 4%. He also pledged to cover 25% of any customer losses.
The firm was highly successful. Over the course of the next 13 years, the fund grew to $105 million with a compound annual return of 29.5%.
1959: Buffett Meets Charlie Munger, Who Becomes His Friend and Business Partner
In 1959, Buffett met Charles T. Munger, a fellow Omaha native and lawyer who had been working in Los Angeles. Buffett and Munger became friends quickly, and by 1967, they were partnering together on business ventures. Munger later became the vice chairman of Berkshire Hathaway.
Munger died in November 2023, at the age of 99. His net worth at the time of his death was $2.2 billion. Like Buffett, Munger was known for his investment savvy, his pragmatism and his generally frugal lifestyle. He was also an active philanthropist who gave millions to the causes he believed in.
Buffett and Munger didn’t meet until they were adults, at a dinner party. But when Munger — six years older than Buffett — was a young man, he did a stint working in a grocery store owned by Buffett’s grandfather. Munger earned just $2 working a 10-hour shift in the store.
1962: Buffett’s Net Worth Reaches $1 Million
In 1962, Buffett Partners was valued at $7.2 million. Warren Buffett’s shares in the company added up to at least $1 million, making the then-32-year-old a millionaire.
Also in 1962, Buffett began investing in Berkshire Hathaway, which was — at the time — a textile manufacturing company headquartered in New Bedford, Massachusetts. Buffett stepped up his investments over time, taking over more and more of the troubled business until he finally controlled Berkshire Hathaway altogether.
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1965: Buffett Takes Control of Berkshire Hathaway
In 1965, Buffett gained a controlling stake in Berkshire Hathaway. Buffett later called the move the “dumbest” stock purchase he’d ever made. The company, founded in 1888, was originally a textile business. By the time Buffett started investing in Berkshire Hathaway, the business was failing.
Today, Berkshire Hathaway is a multinational holding company. Its market capitalization has come close to $1 trillion. The company provides a number of services through its subsidiaries, including finance, manufacturing, utilities and engineering.
Berkshire Hathaway has large stakes in leading companies across different industries, like Apple, Bank of America and Coca-Cola. The company also acquired See’s Candies, which Buffett called “a dream business,” in 1972. Berkshire Hathaway also owns GEICO and a wide range of insurance companies.
1968: Buffett’s Net Worth Reaches $25 Million
By the time Buffett was 38, his investment partnership was a tremendous success, and his personal wealth had reached $25 million. From the start of Buffett Partners, he pledged to his clients: “I’ll run it like I run my own money, and I’ll take part of the losses and part of the profits. And I won’t tell you what I’m doing.”
Buffett earned his customers a compound annual return of nearly 30%, and the fund grew rapidly to reach $105 million by 1968. His own stake in the firm amounted to $25 million by the time he was 38 years old.
1985: Buffett Becomes a Billionaire
In 1985, Forbes estimated Buffett’s personal net worth to be $1 billion. By the mid-1980s, Berkshire Hathaway was a runaway success. Buffett had shifted the company away from textiles to focus on insurance. In 1967, Berkshire Hathaway acquired National Indemnity Company, and in 1976 Berkshire Hathaway invested $4 million in GEICO.
In 1983, Berkshire Hathaway’s shares topped $1,000, another milestone for the business. In 1985, Berkshire Hathaway’s textile operations finally shut down for good, leaving Buffett free to focus on other industries.
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1988: Berkshire Hathaway Invests in Coca-Cola
Buffett is known for his love of Coca-Cola — in fact, the businessman once joked that he’s probably “one-quarter Coca-Cola” because of all the cola he consumes. Buffett is so notorious for loving Coca-Cola that his face was once used to sell Cherry Coke in China.
So it should come as no surprise that Berkshire Hathaway is heavily invested in the Coca-Cola company. Today, Berkshire Hathaway owns a 400 million-share stake, for a value of nearly $25 billion.
Berkshire Hathaway first invested in Coca-Cola in 1988, and the stake has grown by leaps and bounds over the years. Not only does Buffett admire the product, but he also admires its marketing and popularity: He credits the company with building a “mindshare” that adds to its value.
2006: Buffett Pledges To Donate the Majority of His Wealth to Charitable Causes
Buffett is famous for his frugal lifestyle. The billionaire still lives in the same home he purchased for $31,500 back in 1958. He eats a low-cost breakfast from McDonald’s every morning (his go-to choices: two sausage patties; a sausage, egg and cheese sandwich; or a bacon, egg and cheese sandwich).
Buffett’s simple lifestyle means that he can afford to be generous. In 2006, he pledged to donate nearly all of his wealth to charitable causes, both during his lifetime and in his will. Buffett partnered with the Gates Foundation to help him give away his money. His children also run charitable trusts, and Buffett now plans to leave 99% of his wealth to his children’s charitable trusts in his will.
2011: Buffett Receives the Presidential Medal of Freedom
In 2011, President Barack Obama awarded Warren Buffett the presidential medal of freedom. Obama praised Buffett for living a life full of integrity and for “devoting the vast majority of his wealth to those around the world who are suffering, or sick, or in need of help” through his charitable giving.
According to the White House, the medal of freedom is awarded in recognition of “especially meritorious contributions to the security or national interests of the United States, to world peace, or to cultural or other significant public or private endeavors.”
The medal was officially awarded during a ceremony at the White House. During that ceremony, Buffett talked about the circumstances that allowed him to become such a success. He said that he had been lucky to be born in the U.S., and that he had been “extremely lucky in that the two most important people to me in my life, my dad and my wife … they both extended to me unconditional love.”
Finally, he added, “And there’s no power on earth in my view like unconditional love.”
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