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Posted: 28 Jan 2017 06:27 AM PST
What makes Berkshire Hathaway’s Warren Buffet, who holds mega brands like Geico Auto Insurance and Kraft Heinz in his portfolio, such a great investor? He was “wired” for it, he says. “I’ve got the right temperament,” Buffet told journalist Charlie Rose on stage during a Jan. 27 event at Columbia University, from which he graduated in 1951. He was joined by fellow iconic business titan Microsoft co-founder Bill Gates for a wide-ranging question and answer session. Below are five key takeaways from the conversation. On why they’re optimistic about America’s future When asked what they’re most hopeful and worried about under the new Trump administration, both Gates and Buffett cited factors like America’s rich history of progress and innovation. “This country moves forward, and you can’t stop it,” Buffett said. “I say the luckiest person in the history of the world is a baby being born in this country today.” Gates, meanwhile, said it’s America’s entrepreneurial spirit and support for research that will help to continue driving innovation forward. “Whether it’s health or energy breakthroughs, every year that goes by we’re going to have more of those things,” he said. On investing Buffett shared three crucial factors he analyzes when deciding whether to invest in or acquire a company. “I’m looking for something that has a moat around it for a considerable period of time and for an honest and able management to run it,” he said. “And I’m looking for a purchase price that’s not excessive.” He added that it’s better to pay a little too much for a good business than to get a bargain on a company that doesn’t have much of a future. “The first question I ask myself when I look at a business, is it important and easy,” he said. “And a lot of [companies] don’t make it. I’m looking for the one-foot bars to step over versus the eight-foot bars to jump over.” On career advice and taking risks Gates enrolled in Harvard in the fall of 1973, but dropped out just two years later to found Microsoft. But that didn’t feel like much of a gamble, he says. “As the chip came along and made [the computer] mainstream, it became very obvious that something dramatic was going to happen,” said Gates. “So my passion, my hobby, that coincided in a nice way. I never felt it was risky.” Buffett’s advice? Find the job you would want if you didn’t have to work. “Don’t sleepwalk through life,” he said. “You really want to be doing what you love. And you can’t necessarily find it on your first job, but don’t give up until you find it.” On the impact of automation in the workplace Between the decline in manufacturing jobs and an increased focus on self-driving cars among auto and tech firms, automation and its effect on workers has become a contentious topic of debate. Buffett believes technology that makes us more productive will only benefit society, but he says job displacement is an issue that must be acknowledged. “If one person could push a button and turn out everything we turned out now, is that good for the world or bad for the world?” he said. “But people who fall by the wayside through no fault of their own should still get the chance to participate in that prosperity, and that’s where the government comes in.” On the importance of personal relationships When asked about how to distinguish the relationships one should foster from the ones to abandon throughout life, Buffett reiterated how critical it is to grow close with people you admire. “You will move in the direction of the people you associate with,” he said. “You really want to associate with the people that are better than yourself.” Gates largely agreed, saying it’s important to invest in friends that bring out the best in you. “Some friends challenge you about things you’re doing, and that level of intimacy is great,” he said. “I was so obsessed with work I didn’t invest [in friendships] in my 20s and 30s as much as I should have.” |
Friday, February 17, 2017
5 Things We Learned From Listening to Bill Gates and Warren Buffett - TIME
The One Thing Americans Get Right About Retirement Saving - TIME Business
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Posted: 15 Feb 2017 08:00 AM PST
Americans get one thing right when it comes to retirement saving: They would like Warren Buffett to be their personal advisor. That shows they are paying attention to personal finance on one level. But they display a lot of gaps otherwise, new research shows. In general, workers have no idea how much they need to save before calling it quits; they want to live a long life in retirement but are financially ready for only a short one; and they know they should save more but don’t. These are among the discouraging findings in a report released Wednesday by Bank of America Merrill Lynch and aging consultant Age Wave. Half of those past age 50 and still at work say they have no positive role models when it comes to financial planning, the report finds. Many are flying blind. Maybe that’s why they like the idea of enlisting the world’s most famous moneyman as their personal advisor. Asked to choose from among seven “famous financially successful people” to be their “ideal hypothetical advisor,” 67% chose Berkshire Hathaway chief Buffett, who has lived modestly, given vast sums to charity and is worth $75 billion, according to Forbes. Also on the list of choices (respondents could pick more than one) were financial advisor and writer Suze Orman (selected by 38%), Facebook CEO Mark Zuckerberg (34%), Oprah Winfrey (28%), CNBC’s Jim Cramer (17%), Federal Reserve Chair Janet Yellen (9%) and Beyonce (7%). I’m not sure why anyone other than Buffett would get a vote. But the order here is probably close to what it should be. Retirement is the most expensive purchase most people will ever make, costing 2.5 times more than the average home, the report finds. It places the average home value at $278,000 and the cost of retirement at $739,000. Both cost more than raising a child ($245,000). This is an interesting way to look at retirement—as a purchase as opposed to a life phase. It’s especially useful at a time when traditional pensions and guaranteed lifetime income are in short supply. Retirees increasingly will purchase this income through annuities. Most people say they want to live to age 90, the report finds. Yet only 27% of pre-retirees past age 50 feel financially prepared to make their savings last even 10 years. Workers are saving an amount equal to just 5.7% of their after-tax income, compared to the 25% they say they should be saving, according to the report. Why the big gap? It seems clear that many individuals are simply strapped. More than a third say they cannot save because they can barely afford their day-to-day expenses and the cost of paying down debt. But they are also confused about their options. Two-thirds say they find the language of finance difficult to understand. That contributes to low confidence with money matters—individuals are twice as likely to second-guess decisions related to personal finance as those related to work or health. One encouraging sign: When 401(k) plan sponsors are proactive about communicating the benefits of their plan, employees are much more likely to participate. The top trigger for saving, named by 46% of workers, is access to a tax-advantaged plan at work. The second most important trigger, named by 26%, is effective communication. The report also suggests that many people have some idea of how they might strengthen their finances, even if they aren’t doing that now. Here are some of the most common options that workers and retirees say they would consider:
If Buffett really was your advisor, he’d probably encourage you to start at the top of that list right now. It’s easy to dream about his billions. But even he started modestly and bulked up his net worth over many years.   |
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