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Earlier than Charlie Munger handed away at 99 in 2023, he left behind greater than legendary funding recommendation. He additionally left behind a modest dwelling he lived in for seven many years—and a blunt message about why most individuals get it incorrect when chasing “dream houses.”
“In virtually each case, they make the individual much less glad, not happier,” Munger mentioned in a 2023 interview with CNBC’s Becky Quick.
He wasn’t speaking about starter houses. He meant the sprawling mansions, the posh upgrades, the type of homes folks stretch their budgets for. In response to Munger, “having a fundamental home actually helps you. Having a very fancy home… does not do you that a lot good.”
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Let that sink in—this got here from a billionaire who completely may’ve afforded 10 Beverly Hills estates. However he selected to remain put in his Pasadena, California dwelling. Identical goes for longtime enterprise accomplice, Warren Buffett, who’s lived in the identical Omaha home since 1958. Price ticket on the time? Simply $31,500. Immediately, it is estimated to be value round $1.4 million—not that he cares.
Buffett as soon as defined the logic in typical Buffett trend at Berkshire Hathaway’s annual shareholder meeting again in 1998: “We are able to both purchase a home, which can burn up all my capital… or you possibly can let me work on this.” His spouse agreed. They waited 4 years after marrying earlier than shopping for a house, as soon as the down cost was simply 10% of his web value. He believed he may flip that $31,500 into $1 million in about 12 years if he invested as an alternative. And he did.
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Munger did not simply suppose massive houses have been a monetary lure—they have been a happiness lure. “It is good for entertaining 100 folks directly. It is a very expensive thing to do. And it does not do you that a lot good,” he mentioned.
Munger spent a lot of his life speaking about sanity, not simply wealth. “It isn’t staying wealthy that is tough,” he mentioned. “It is staying sane.” His recommendation for that? Keep away from traps. The type that include standing chasing, massive spending, and considering extra sq. footage equals extra achievement.
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