Charlie Munger, who handed away this week at age 99, may have afforded a mega-mansion—or a number of of them. As a substitute, the billionaire investor stayed put in the identical modest house in Los Angeles for seven a long time.
One cause, defined the longtime enterprise associate to Warren Buffett, was that extravagant houses don’t actually make individuals happier.
He and Buffett had watched their associates who’d develop into rich construct “really fancy houses,” he stated in a CNBC interview that was performed just a few weeks earlier than his dying.
However “I would say in practically every case, they make the person less happy, not happier,” he stated.
Having a primary home “really helps you,” he stated. However “having a really fancy house, it’s good for entertaining 100 people at once. It’s a very expensive thing to do. And it doesn’t do you that much good.”
Munger did take into account shopping for an even bigger home, he stated, however he “still decided not to live a life where I look like the Duke of Westchester or something. And I was going to avoid it. I did it on purpose.”
One cause is that he nervous that an opulent life-style would spoil his youngsters.
“I didn’t think it would be good for the children,” he stated. “You grow up in a rich family, your duty is to use the wealth and live grandly. That is what everyone is doing with the money. You will learn from people who are doing it.”
‘A house can be a nightmare’
Buffett, much like Munger, has lived in the identical home for many years—one he purchased in Omaha, Nebraska, for $31,500 in 1958. The Berkshire Hathaway chairman and CEO nonetheless considers the house, now price over $1.3 million, one in all his finest investments.
In Might, when guests descended upon Omaha for the annual Berkshire shareholder assembly, many Buffett followers snapped pictures in entrance of his unremarkable house, as native TV station WOWT reported.
Buffett wrote in 2010 that whereas it’s straightforward to really feel pressured to purchase a house, it may be smarter to hire, relying on one’s private funds.
“A house can be a nightmare if the buyer’s eyes are bigger than his wallet and if a lender—often protected by a government guarantee—facilitates his fantasy,” he wrote. “Our country’s social goal should not be to put families into the house of their dreams, but rather to put them into a house they can afford.”
Lottery winners typically rapidly purchase many fancy houses, which monetary advisors warn is a mistake.
“I’ve seen clients purchase large homes in faraway locations that they ultimately realize they will not use frequently and end up being a major ongoing financial burden that took several years to sell,” Paul Karger, cofounder and managing associate of wealth advisory agency TwinFocus, just lately instructed Fortune.
Munger’s frugality prolonged past his housing selection, nonetheless.
“His idea of traveling in style,” Buffett wrote of Munger in a 1989 letter to shareholders, “is an air-conditioned bus, a luxury he steps up to only when bargain fares are in effect.”