In 1965, a middle-aged couple in Omaha, Nebraska faced a common but challenging predicament: how to effectively plan for their retirement. Dorothy and Myer Kripke had saved diligently and received a modest inheritance, putting them well ahead of their peers when it came to saving for retirement. That year, her savings were about $67,000, which, adjusted for inflation, would be about $650,000 today.
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Their primary concern has been the preservation and growth of their nest egg to ensure it will be available to them when they retire over 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 old Warren Buffett. He was a neighbor who had already established a good local reputation as an experienced money manager.
Little did they know that Dorothy and Myer Kripke had encountered a man who would later be hailed as one of the greatest financial investors in history. Known as the Oracle of Omaha, Buffett later ran an investment business that totaled about $500 billion.
The Kripkes met Buffett through occasional bridge games and holiday get-togethers.
Myer initially had reservations about entrusting his savings to a young, up-and-coming wealth manager. He feared this would put a strain on their friendship and doubted that mixing business with personal relationships was wise. Buffett's minimum investment requirement at the time was $150,000, making it seemingly impractical to approach him with less than half that amount.
Dorothy's determination prevailed, and despite Myer's three-year resistance, he finally approached Buffett. Buffett agreed to manage their funds without hesitation and emphasized his desire to keep their friendship alive in the face of potential losses. “I liked Myer [and] I wanted people that we could still be friends with even if things went wrong,” Buffett said.
Their collaboration flourished, and over the next three decades, Buffett's business expanded exponentially. In parallel, the Kripkes' initial investment of $67,000 quickly multiplied.
“We got in fairly early on with a modest amount of money. Then it went off like a nuclear bomb,” Myer said of her financial journey.
Their wealth grew and the Kripkes went from millionaires to multi-millionaires. By the mid-1990s, their $67,000 had swelled to over $25 million, which would be about $40 million today, adjusting for inflation.
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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 reached $25 million by the mid-1990s. Had they kept those shares until Dorothy's death in September 2000, their value would have doubled to $50 million. When Myer died in May 2014 and Berkshire shares were trading at $215,000 per share, their 833 shares would have been worth $180 million.
Today, someone who owns 833 shares of Berkshire Hathaway would be worth about $394,222,356 — nearly $400 million — all for a $67,000 investment.
The value of long-term investments
These stories show the positive effects of a long-term investment. Finding the right stocks with strong long-term growth potential and then believing in your investment thesis can produce incredible results for years to come. For those who are inclined: Start-up investment platforms like StartEngine allow investors to own shares in companies in the earliest stages, including investing in StartEngine itself. This allows investors to invest in companies before they are sold to the Go public, multiplying potential gains that would otherwise not be available post-IPO.
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This article Warren Buffett Turned His Neighbor's Life Savings From $67,000 To $400 Million originally appeared on Benzinga.com
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