Charlie Munger Explains Why It Will Be Tough For Gen Z Investors To ‘Get Rich And Stay Rich’
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Charlie Munger – who has a net worth of $2.7 billion – is warning young adults that it will be more difficult for them to get rich compared to older generations.
Munger became the vice chairman of Berkshire Hathaway in 1978 – a position he still holds at the age of 98. Munger has made a fortune as being the vice chairman of Warren Buffett’s investment and holding firm, Berkshire Hathaway.
Buffett knew instantly that Munger was an intelligent businessman.
“I just knew instantly Charlie was the kind of guy that I was going to like, and I was going to learn from,” Buffett said of Munger, reflecting upon their very first meeting. “You know, it wasn’t anything calculated, a decision or anything like that. It was natural. And we have had nothing but fun.”
Before joining Berkshire Hathaway, Munger ran his own investment firm that posted an average annual compound rate of 19.8% between 1962 and 1975 – out-gaining the Dow Jones Industrial Average’s 5% over the same time period, according to Buffett’s famous 1984 essay, “The Superinvestors of Graham-and-Doddsville.”
However, Munger understands that things are definitely not like they once were, and acknowledges that Gen Z investors will experience a tougher time getting rich and staying rich.
In February, Munger spoke at the annual meeting of the Daily Journal Corporation – a Los Angeles-based publishing company and technology company where Munger is the chairman.
“It’s going to be way harder for the group that’s graduated from college now … to get rich and stay rich,” said Munger, according to CNBC’s Make It. “Think what it [used to] cost to own a house in a desirable neighborhood in a city like Los Angeles.”
In 1980, the median price for a house in California was $80,055 – adjusted for inflation, the same home in 2022 would cost $275,6000, according to the Bureau of Labor Statistics. However, the median house price in California was more than $800,000 last year, according to the California Association of Realtors.
Previously, Munger’s investment advice was to “own a diversified portfolio of common stocks,” which he says could net intelligent investors a 10% return on investment. However, Munger noted that the current economic situation makes it difficult to give young adults “one-size-fits-all investment” advice.
Munger said that the complexity of investing has ruined his strategies that were once foolproof.
“I don’t think the future is going to give the guy graduating from college this year nearly that easy [of] an investment opportunity,” Munger revealed.
“I think you have to figure out your level of skill, or the level of skill your advisor has,” Munger advised. “To everyone who finds the current investment climate hard and difficult and somewhat confusing, I would say: Welcome to adult life.”