Was Warren Buffett Born Rich?

At the age of 91, Warren Buffett’s net worth is $114 billion, and he is one of the most respected investors of all time. When Buffett makes a trade, the entire market responds, and his influence extends to every corner of the financial world. 

Those who aren’t familiar with Buffett’s modest beginnings assume he started life with all the advantages of wealth, including a successful family, a secure childhood, and the sort of financial backing that makes it easy to get an education and launch a career. But was Warren Buffett born rich? Or did he build his fortune entirely on his own? Here is his astonishing – and inspirational – story. 

Was Warren Buffett’s Father Rich? 

The 1930s are remembered as one of the most difficult periods in American history. The Great Depression put millions out of work, and starvation was a real threat to the nation’s families.

Nebraska, along with other states in the United States’ Southern Plains region, faced a second formidable challenge during the Depression: drought. Massive dust storms choked crops, and the area became known as the country’s “Dust Bowl.” 

Warren Buffett was born into these unprecedented conditions on August 30, 1930. His parents were proud residents of Omaha, Nebraska, and in fact, Buffett still makes his home there today. Was Warren Buffett’s father rich? Were Warren Buffett’s parents among the few who escaped the devastating effects of the Great Depression? 

Not at all. In fact, Howard Buffett, Warren Buffett’s father, was the son of grocers, and he received a public school education. When Warren was born, Howard had just launched his own small brokerage firm, and he was struggling to make a name for himself in the financial world.  

How Did Warren Buffett Start Out? 

Something about his father’s business inspired Warren Buffett because he started his own company when he was just five years old. His entrepreneurial spirit was strong, and once Buffett got ahold of a copy of One Thousand Ways to Make $1,000, he was unstoppable. 

Some of Buffett’s earliest ventures included door-to-door sales of Coca-Cola, chewing gum, and magazines. Buffett charged a few cents more for the merchandise than local shops, but his customers were glad to pay a little extra for the convenience of home delivery. 

Once he was old enough, Buffett went to work in his grandparent’s grocery store, but that wasn’t his only source of income. He had a paper route, he collected lost golf balls and sold them back to players, and he developed the skills necessary to quickly and efficiently detail cars. 

Through his various projects, including his paper route, Buffett earned enough to make a tax return necessary when he was 14. It’s worth noting that even as a teenager, Buffett was careful about avoiding unnecessary expenses. He minimized his tax liability by deducting the use of his bicycle and his watch against the income earned through his paper route. 

When Warren Buffett was 15, he and a friend came up with a clever method of earning income that didn’t require hours of physical labor. They bought a second-hand pinball machine and installed it in a neighborhood shop. Profits were reinvested in additional machines, and within a year, they were able to sell their small business for $1,200 – a handsome return on their initial $25 investment. 

How Did Warren Buffett Learn to Invest? 

Buffett was just 11 when he purchased his first stock – three shares of Cities Service Company, which eventually became known as Citgo. This first investment wasn’t especially successful. The price dropped, and Buffett became alarmed. As soon as it regained its value, Buffett sold his shares, which earned him a very small profit. 

Buffett watched the stock’s progress after he sold, and he realized that patience would have served him well. Though he didn’t lose money, his fear prevented him from realizing larger gains – a mistake he didn’t make again. For the rest of his decades-long career, Buffett has resisted the temptation to follow market ups and downs. 

What is Warren Buffett’s Investing Strategy?

Warren Buffett’s first experience in the stock market formed the foundation of the investment strategy that he used to build his multi-billion dollar fortune. Rather than buying into popular stocks when the rest of the world does – and selling when they start to lose value – Buffett is a contrarian. He goes against the crowd and chooses fundamentally sound companies that he can buy at value prices. Then, he keeps them long term. 

Unlike many of his peers, Buffett doesn’t constantly buy and sell assets. He does in-depth fundamental analysis, determines intrinsic value, and buys companies that have strong but not yet obvious potential.

As a result, he can get them at bargain prices before the rest of the market catches on. Examples include Geico Insurance, Dairy Queen, Duracell, See’s Candy, Pampered Chef, and Fruit of the Loom – all of which are wholly-owned subsidiaries of Buffett’s holding company, Berkshire Hathaway. 

Berkshire Hathaway’s portfolio, as developed by Warren Buffett, doesn’t hold startups or so-called “meme stocks.” He doesn’t jump on the bandwagon when an industry or particular company gets a lot of press, and in fact, he almost never participates in IPOs – Snowflake is a rare exception. 

Companies like Kraft-Heinz, Coca-Cola, Bank of America, and Kroger have important characteristics in common – characteristics that make them right for Warren Buffett. Specifically, they are solid businesses with a long history of success. They have strong brands, and they provide products and services that consumers will buy, no matter what state the economy is in. 

That isn’t to say that Buffett eschews technology or avoids progress altogether. Through Berkshire Hathaway, Buffett has a stake in Apple and several of the top 5G companies. However, Buffett didn’t make those trades until he was confident that the companies were positioned to lead growing industries. 

What Is Warren Buffett Known For? 

Warren Buffett wasn’t born rich, though today, he is best known for his success in amassing his fortune through a thoughtful value investing strategy. The fact that Buffett wasn’t born rich appears to have influenced his philosophy on generational wealth. 

He has already given billions away to charitable organizations, and he has pledged to use most of his remaining fortune to support social causes. Buffett’s view on generational wealth is straightforward. As he put it: 

I am not an enthusiast of dynastic wealth, particularly when the alternative is six billion people having that much poorer hands in life than we have, having a chance to benefit from the money.

To date, Buffett’s largest contribution has gone to the Gates Foundation, which is focused on fighting disease and promoting education in developing countries. 

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