Why Warren Buffett Keeps ₹16 Trillion Cash: The Billionaire’s Burger & Coke Habit, 99% Wealth Built After 50

In the year 1950, during the summer season, a young American applied for admission to Harvard Business School. After an interview that lasted about 10 minutes in Chicago, he was told, “Forget it… you won’t be able to study at Harvard.”

Letter to Professor David Dodd

After this rejection, he wrote a letter to Professor David Dodd of Columbia Business School, saying, “Dear Professor Dodd. I thought you had passed away, but I found out you are teaching at Columbia. I wish to study under you.”

Upon reading the letter, Professor Dodd was so pleased that he immediately invited the young man to Columbia. After learning the principles of investment there, this young man became the world’s largest investment banker, Warren Buffett. Today is his 94th birthday.

The Wealth of Warren Buffett

With a total wealth of 11 trillion rupees, he is the sixth richest person in the world. His company, Berkshire Hathaway, has invested approximately 24 trillion rupees in 47 large companies, including Apple, Coca-Cola, and Bank of America.

First Shares Purchased at Age 11, Earned $5

Warren Buffett was born on August 30, 1930, in Omaha, Nebraska, USA. His father, Howard Buffett, was a stockbroker who later became a congressman.

Due to his father, Buffett developed an interest in stocks from a young age. At the age of 6, he collected $120 by selling golf balls, popcorn, and peanuts.

With this money, in 1942, 11-year-old Buffett, along with his sister, bought 3 shares. These shares were of the American Petroleum Company, Cities Service. After three months, the value of these shares dropped from $38.25 to $27 per share. Every day on the way to school, his sister Doris Buffett urged him to sell the shares, but Warren decided to wait. Finally, about four months later, Buffett made a profit of $5 from these shares.

Understanding the Power of Compounding, Accumulated 99% of Wealth After Age 50

Warren Buffett, who started earning money at the age of 11, became a billionaire by the age of 56. However, Buffett earned 99% of his wealth after the age of 50.

Buffett made full use of the power of money to make more money, which in English is called ‘compounding.’ At the age of 21, Buffett had a wealth of $20,000, which increased sevenfold to $140,000 by the age of 26. By the age of 30, Buffett’s wealth had increased to $1 million.

This was in the 1960s when the annual income of an American family was $5,600. In today’s terms, this would be approximately ₹5 million annually. While an average American family could earn ₹10 million in two years, 30-year-old Warren Buffett had already earned more than ₹80 million.

Married a Friend of His Late Wife at the Age of 76

On April 19, 1952, Warren Buffett married a woman named Susan. Warren and Susan had three children named Susan Alice, Howard, and Peter. When Alice was born, instead of buying a crib, Warren Buffett converted a dresser drawer into a crib. Similarly, when their second child, Howard, was born, he borrowed a crib.

In 1977, Susan separated from Warren and moved to San Francisco, but they did not divorce. Susan passed away on July 29, 2004. Two years later, in 2006, Warren married Astrid Menks, who had been living with him for many years. It was Susan who had introduced Astrid to Warren. After moving to San Francisco, Susan realized that Warren was having difficulty managing the house alone.

In an interview, Susan said, “I called Astrid and asked, ‘Will you go take care of Warren, make soup for him, and take care of him?’ Initially, Astrid hesitated, but gradually she and Warren started spending time together. They began living together around May 1978.

In a 2008 interview, Buffett said that the biggest mistake of his life was letting Susan go. American financial journalist Alice Schroeder writes, “Warren regretted Susan leaving. He says, ‘This could have been prevented. 95% of it was my fault. I couldn’t adjust well with her, but she always adjusted well with me. She kept me for many years. This shouldn’t have happened.'”

Named His First Jet ‘The Indefensible’, His Second Jet ‘The Indispensable’

Warren did not want to buy a corporate jet. He considered it against his humble upbringing. His friend Charlie Munger, Vice Chairman of Berkshire Hathaway, was also not keen on buying an expensive plane. Eventually, with Charlie’s consent, Warren Buffett bought an old Falcon-20 jet in 1986. At that time, it cost $850,000, which is about ₹70 million today.

After buying this jet, the expensive purchase became a topic of discussion, so he named it ‘The Indefensible,’ meaning something that cannot be justified. However, he later sold this jet and in 1989 bought another old jet for $6.7 million, or about ₹550 million.

Buffett said that he had been opposed to buying a corporate jet for years, but later he named this new jet ‘The Indispensable,’ meaning something or someone that is very important.

In the 1990s, Buffett wrote, “If I die tomorrow, Hathaway’s earnings will increase by $1 million a year because Charlie will immediately sell the company jet after my death.”

When a Friend Asked for Money, Buffett Went to Get Change for a Quarter Dollar

It is said that Warren Buffett has always been very frugal. American newspaper publisher Katharine Graham of The Washington Post was a close friend of his. Once at an airport, she asked Buffett for a dime to make a phone call. This is equal to 10 cents. Buffett pulled out a quarter dollar and went to get change for it. In reality, a quarter dollar equals 25 cents, and Katharine only needed 10 cents. Eventually, after much trouble, Buffett agreed to give Katharine the whole quarter dollar.

The World’s Largest Investor, But Lives in a 66-Year-Old House

Buffett currently lives in his 65-year-old modest home in Omaha. He bought this house in 1958 when it cost $31,500, which is approximately ₹2.6 million. However, if we add the effect of inflation, its value today would be ₹108 million.

Buffett wrote about this house in a letter to Hathaway’s shareholders, calling it his third-best investment. This house is built on 6,280 square feet, with 5 bedrooms and two bathrooms. Since buying the house, Buffett has increased its security. The house is surrounded by strong fencing and many cameras are installed.

However, in 1971, Buffett bought another house in California for $150,000. In 2017, he decided to sell this house located on Laguna Beach for $11 million. In October 2018, he sold it for $7.5 million, which is approximately ₹620 million.

Uses Old Cars Instead of Buying New Ones

Rich people around the world are fond of expensive cars. In contrast, Buffett has driven a modest car for a long time. For many years, he drove a 2001 model Lincoln Town Car. The license plate of this car had the word ‘Thrifty’ written in English, which literally means ‘economical’ or ‘spending less.’ Warren later auctioned this car for charity.

After this, he bought a 2006 model Cadillac DTS. According to Forbes, in 2014, he replaced the DTS with a Cadillac XTS.

Regarding his choice of cars, Buffett said, “The truth is that I only drive 3,500 miles a year, so I rarely buy a new car.

Buffett Used a Cheap Phone Until 2020

Buffett’s company, Hathaway, holds about a 5% stake in Apple. Despite this, he did not own an Apple phone until 2020. Before that, he used a Samsung SCH-U320 model phone, which featured a flip screen. Such Samsung phones are available for only ₹2,000.

Buffett Started Using the iPhone-11 in February 2020

In February 2020, Buffett began using Apple’s iPhone-11. He mentioned that he was given many iPhones, with one even being gifted by Tim Cook (Apple’s CEO). However, Buffett only uses the iPhone for making calls. For checking stock prices and conducting other research, he relies on Apple’s iPad.

Buffett Owns Only 20 Suits, Gets Haircuts at Low Cost

Despite being the sixth richest person in the world, Warren Buffett opts for cheap haircuts. He has been getting the same haircut at a barber shop near his office for many years, spending only $18 for it.

Buffett Has 20 Suits, All Made in China

He follows a similar approach with his clothing. Instead of expensive and luxurious Italian suits, Buffett wears affordable suits made in China.
In an interview, Buffett said, “I have about 20 suits, all made in China by designer Madam Li. I have an old friendship with Li, who is an entrepreneur who found her own way in business. My relationship with Madam Li began when she gifted me suits.”

Drinks Cold Beverages 5 Times a Day, Spends Only ₹263 on Food

Buffett once told Fortune magazine that he eats “like a 6-year-old.” Almost every day, he has breakfast at the burger chain McDonald’s on his way to work.

Buffett Spends Only ₹263 on Meals

In 2017, he didn’t spend more than $3.17, or ₹263, on his meals. He would order food and pay with loose change. In HBO’s documentary “Becoming Warren Buffett,” he mentioned that he drinks a lot of Coca-Cola. He said he drinks cold beverages at least 5 times a day.

Warren Buffett’s Company Has ₹15.8 Lakh Crore in Cash

Warren Buffett’s company, Berkshire Hathaway, holds $188 billion, or roughly ₹15.8 lakh crore in cash. This means he hasn’t invested this amount, nor has he bought gold with it. He hasn’t placed this money in fixed deposits or even deposited it in a bank. Due to inflation, he’s losing 2% to 4% of this massive amount every year, so why does Buffett do this?

Experts Explain Buffett’s Strategy

Experts say Buffett is actually waiting for a once-in-a-decade opportunity, such as the 2020 COVID-19 pandemic, the 2008 Lehman Brothers crisis, or the 2000 dot.com bubble crisis.

Buffett Uses Cash to Buy Stocks at Discounts During Crises

In such instances, when most companies start going bankrupt, Warren Buffett buys stocks at a 40% to 50% discount. Buffett uses his cash to purchase these shares at lower prices.

Buffett’s Long-Term Strategy Involves Patience

In 2020, during his shareholder meeting in Omaha, USA, Warren Buffett said, “In the next 20-30 years, this will happen two or three times, when it will rain gold. Then we will have to go out and collect it, but no one knows when that will happen.”

Buffett Sold 129 Million Bank of America Shares Since July

Since July, Buffett has sold 129 million Bank of America shares for ₹45,338 crore ($5.4 billion). Some experts see this as a sign of a shift in Buffett’s long-term investment strategy. Before this, he had sold 389 million Apple shares.