In 1965, a middle-aged couple from Omaha, Nebraska faced a difficult but common situation: how to effectively plan for retirement. Dorothy and Myer Kripke had saved diligently and received a modest inheritance, which put them well ahead of their peers in terms of retirement planning. Their savings that year were about $67,000, which when adjusted for inflation would equal about $650,000 today.
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Their main concern was to preserve and grow their nest egg to ensure its availability when they retired in the next decade or two. After months of deliberation and stress, Dorothy offered her husband a simple solution: “Myer, invest the money with your friend, Warren.”
This acquaintance was none other than 35 years warren buffet. He was a neighbor who had already established a positive reputation locally as a qualified fund manager.
Little did they know that Dorothy and Myer Kripke had stumbled upon a man who would later be hailed as one of the greatest financial investors in history. Buffett, known as the Oracle of Omaha, would go on to run an investment business with assets totaling around $500 billion.
The Kripkes got to know Buffett through casual bridge games and holiday gatherings.
Myer had initial reservations about entrusting his savings to a promising young fund manager. He feared it would strain their friendship and questioned the wisdom of mixing business and personal relationships. Buffett’s minimum investment requirement at the time was $150,000, making it seemingly impossible to approach him with less than half that.
Dorothy’s determination prevailed and despite Myer’s resistance for three years, he finally reached out to Buffett. Buffett agreed to handle their funds without hesitation, emphasizing his desire to maintain their friendship even in the face of potential losses. “I liked Myer [and] I wanted people who, if things went wrong, we could still be friends,” Buffett said.
Their collaboration flourished, and over the next three decades Buffett’s business grew exponentially. At the same time, the Kripkes’ initial $67,000 investment multiplied rapidly.
“We arrived quite early with a modest sum of money. Then it sprung like an atomic bomb,” Myer said of their financial journey.
Their wealth grew and the Kripkes went from millionaires to multi-millionaires. By the mid-1990s, their $67,000 had skyrocketed to over $25 million, which today, taking inflation into account, would be around $40 million.
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During this period, Berkshire Hathaway Inc.The stock price fluctuated between $20,000 and $40,000 per share. Assuming they owned about 833 shares at an estimated price of $30,000 per share, the Kripkes’ net worth in the mid-1990s reached $25 million. Had they held onto those shares until Dorothy’s death in September 2000, their value would have doubled to $50 million. By the time Myer died in May 2014, with Berkshire shares trading at $215,000 a share, their 833 shares would have been worth $180 million.
Today, someone who owns 833 shares of Berkshire Hathaway would have a fortune of around $394,222,356 – almost $400 million – all for an investment of $67,000.
The value of long-term investment
These stories show the cumulative capabilities of long-term investing. Finding the right stocks with strong long-term growth potential and then believing in its investment thesis can yield incredible results over the years. For those inclined, startup investment platforms like StartEngine allow investors to own equity in companies from the early stages, including investing in StartEngine itself. This allows investors to invest in companies before they go public, multiplying the potential gains that otherwise would not be available after the IPO.
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This article Warren Buffett Turned His Neighbor’s Life Savings of $67,000 into $400 Million originally appeared on Benzinga.com
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