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If You Invested 1,000 in Berkshires IPO, This Is How Much Money You&x27d Have Now | The Motley Fool

If you’re young today, you have the best investment advantage in the world: time.

Due to the miracle of compounding investment returns, investing a small amount today in a winning investment idea has the potential to fund your entire retirement—that is, if the idea is good enough and you stick with it long term. .

Reading: Brk.a ipo

don’t you believe me? Consider the track record of the world’s best long-term value investor: Warren Buffett. if you were lucky enough to meet buffett when he initially took over the new england textile business berkshire hathaway (brk.a 1.35%) (brk.b 1.26%) in 1964, and had the ability to invest just $1,000, your retirement would be more than set by now.

Don’t you think just $1,000 could fund your entire retirement? you might be surprised.

a pretty good “mistake”

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berkshire hathaway already existed as a public company before buffett took over. Its origins actually date back to 1839 and it became a major textile manufacturer in New England over the next 130 years. Buffett began buying shares in the company through his investment company in 1962. In 1964, the owner of Berkshire made an offer to buy Buffett’s shares for $11.50 each, to which Buffett agreed. however, when the offer came, it was for $11,375, below the agreed price. This angered Buffett so much that he decided to buy the rest of the company instead of selling it, and then fired the CEO who had slighted him.

Unfortunately, Berkshire Hathaway was a declining business and finally closed in 1985; But in the meantime, Buffett and his partner Charlie Munger took the cash flow from their operations, then diversified into insurance and many other businesses, using their value investing acumen to reap huge profits over time.

Buffett’s early insurance profits came from investments in National Indemnity and Geico, which is now owned by Berkshire, along with consumer businesses such as See’s Candies and the Washington Post. Berkshire then compounded those gains with ever-increasing investments in more recent years, including the BNSF Railroad and Midwestern Energy in the early 2000s.

In terms of public market investments, Buffett made a living investing in coca-cola(ko 0.82%), capital cities/abc and gillette in the 1980s, then Wells Fargo (WFC 0.68%) in the 1990s. During the 2008 financial crisis, Buffett raised a large amount of US dollars. financial institutions, including goldman sachs (gs -0.25%) and buffett’s current favorite bank, bank of america (bac 1.08%). More recently, Buffett has bought stakes in the top four US companies. airlines, and during the period 2016-2017 it took its largest public equity position of all in apple (aapl -0.09%).

26.6 million dollars

Between 1964, the year Buffett took over Berkshire, and 2018, Berkshire’s market value has compounded at a staggering 20.5% annual rate, appreciating 2,472,627% during that time. period. So far in 2019, shares of Berkshire are up almost 8% to $329,225 per share. Berkshire has never split its A shares, although it did introduce B shares at a more modest price in 1996.

See also: Best Compound Interest Investments | Bankrate

BRK.A Chart

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Thus, from 1964 to November 2019, Berkshire stock rose 2,666,178%. That means if he had invested $1,000 in Berkshire back then, perhaps due to his instinctive “belief in new management” under buffett, that stake would be worth a staggering $26.7 million today.

It goes without saying that it can pay off, and pay off big, by looking for winning investments you can hold on to for the long haul. As Berkshire’s astounding returns show, 54 years of compounding can turn just $1,000 into many millions, giving you and your family financial independence in your later years. While it would be difficult to match Buffett’s long-term returns, the example shows that, given enough time, judiciously adding even small sums of money to your investment account in high-quality businesses with good management can lead to retirement. healthy and prosperous.

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