Frugal billionaire Warren Buffett drives a 2014 car looking for hail damage

Warren Buffett's choice of vehicle has become an interesting topic for many people. The billionaire investor, known for his frugal and simple lifestyle, drives a 2014 Cadillac XTS. While some billionaires indulge in extravagant cars as a visible symbol of wealth and success, Buffett's fondness for older models reflects his unique approach to life and finance.

Buffett's frugality and minimalist mindset were key factors in his tremendous success as an investor. His ability to seek value in all aspects of life, not just business and investing, has shaped his distinctive financial philosophy. When it comes to cars, Buffett has a clear distaste for the rapid depreciation of new vehicles. Instead, he opts for used cars, which offer significant discounts due to cosmetic issues like hail damage.

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In a 2014 interview with Forbes, he revealed that he only drives about 3,500 miles a year, so there really isn't a need to swap out his car often. After driving his 2001 Lincoln Town Car for a decade, Buffett auctioned it off for charity and replaced it with a 2006 Cadillac DTS. He drove that car for eight years before replacing it with his current Cadillac XTS , year of construction 2014, replaced.

At a Berkshire Hathaway meeting years ago, Buffett explained the reasons behind his choice of car, stating, “Actually, I chose the car that I have based on the fact that it had airbags on both sides. So that was a factor and maybe the first car of its kind ever built with airbags.

Along with affordability, security also plays a crucial role in his decision making. Buffett acknowledged that there might be safer options like heavy-duty trucks, but explained that he personally preferred his current vehicle at the time.

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His daughter Susie Buffett humorously recounted an anecdote about her father's love of his cars in a BBC documentary: “You have to understand that he keeps cars until I tell him, ‘This is getting embarrassing – time for a new car.' ‘” She also revealed that he sent her to buy his latest car, the now-discontinued 2014 Cadillac XTS.

With his characteristic straightforwardness, Buffett expressed, “I have everything I want in life; it's a very simple thing. If there is anything money could buy that I wanted, I would do it this afternoon without hesitation.”

His position challenges the conventional notion that higher living standards are directly related to higher spending and the accumulation of material wealth. While he recognizes the importance of basic necessities such as good housing, health care and transport, he believes that at a certain point there is an inverse relationship between living standards and the cost of living.

Even as one of the richest people in the world, Buffett remains grounded and connected to the realities of everyday life. Buying a car is time consuming. And he just doesn't want to waste time.

“If it would probably take me half a day to buy a car and read the owner's manual and all that, and that's only half a day, I don't want to give up my life for good,” Buffett said.

Buffett's frugality in investing

Buffett's frugality isn't just limited to his personal life. The legendary investor is known for his incredible ability to spot a good stock when he sees it. The “Buffett Indicator” is the measure of US GDP compared to the overall value of US stocks and is a key indicator used by the billionaire when analyzing the overall market.

The indicator is currently at a whopping 176%. 120% is considered “fair value”, with 223% in 2021 being the highest in recent history. As the name suggests, this is merely an “indicator” and therefore not definitive, but it does imply that US stocks are still stretched, which may lead investors to think you'll perform best by looking at individual stocks, that are underperforming the broader market but poised for a recovery. There are also a number of alternative investments in today's markets, such as the fast-growing startup investment markets. Startups like Loop Family, for example, have already raised over $100,000 from individual investors and are backed by top venture capitalists.

For more information, see startup investments by Benzinga.

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