Charlie Munger, a billionaire who has held numerous positions, is the director of Daily Journal Corp. and the longtime vice chairman of Warren Buffett's holding firm Berkshire Hathaway Inc. His years of experience in investing and finance makes him a force to be reckoned with.
Munger has some advice for young investors who want to make their mark in the finance industry. He's warning the latest batch of college graduates that getting rich and staying that way might be tougher than it used to be. Munger points to two significant obstacles in the way of young people trying to get and stay rich: inflation, skyrocketing real estate prices and the complex nature of investing.
Munger observes that the days of a one-size-fits-all investment strategy are long gone, owing to the staggering increase in real estate prices over the past few decades. In 1980, when Munger first took over at Berkshire, the average price for a house in California was $80,055. Adjusted for inflation, that would be around $275,600 today. But fast forward to 2023, and the median home price in California has skyrocketed to around $800,000.
Munger warns that the tried-and-true investment strategy of owning a diversified portfolio of common stocks may not be as foolproof as it once was. He warns that today's investment landscape is going to be more challenging than it was for previous generations.
The billionaire wants to get personalized investment advice to assist in today's intricate investment landscape. Munger notes that investors must consider their own level of expertise or the level of skill their adviser has in their investment advisor before making any major investment decisions. Is investing difficult for those who find it difficult? What Munger says: Welcome to adult life! The investment landscape in today is significantly different from that of the 1980s, and anyone can invest in a wide range of traditional and alternative investments from their smartphone. For just a few hundred dollars, anyone can invest in real estate and startups. Blendid, a startup, is raising on StartEngine and has raised more than $8 million from retail investors.
Munger once recommended holding a diversified portfolio of common stocks to earn an intelligent investor around a 10% return, but he acknowledges that it's no longer a sure-fire tactics.
I don't think the future will offer a young person coming out of college this year such an easy investment opportunity, Munger said.
Warren Buffett, a friend and CEO with Berkshire Hathaway, is a voyage to the investing world, advocating for investing in funds to avoid complexity.
However, patience is key, as the S&P 500 has experienced some volatility in recent times - it slowed down 5% since the beginning of 2022. Munger and Buffett's investing success is based on patience, so follow their examples and take a long view may be the best strategy.
Although even the best investors are sometimes wrong, Munger's insights are particularly remarkable for young investors facing an uphill battle in today's investment climate.