Ted Weschler. Joppen
Warren Buffett's deputy increased his retirement fund from $70,000 up to $264 Million in 30 years.
Ted Weschler shared his strategy and tips for saving money in a recent interview.
Weschler shared his experiences with loss and talked about his role at Berkshire Hathaway.
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Warren Buffett's deputy managed to grow his retirement fund from $70,000 up to $264 Million in just 30 years. In a Washington Post interview, he explained how he did it and shared his secrets about how to avoid investment losses.
Ted Weschler, who assists Buffett in managing Berkshire Hathaway’s investment portfolio, spoke with Allan Sloan about his approach for the writer's new column. ProPublica revealed the size of Weschler’s nest egg in June using federal tax returns.
Sloan was informed by Weschler via email that "In a perfect universe, nobody would know about it." He also stated that he hoped the revelation would encourage people to save and invest early in their careers.
In 1984, the investor opened an independent retirement account (IRA). He was 22 years old and earned $22,000 per year as a junior analyst at WR Grace (a chemical company). He maximized his contributions and took advantage of a generous match from his employer. His account grew to more than $70,000 by 1989, the year he quit his job and started a private equity company.
Weschler launched a hedge fund in 2000 that delivered compounded after-fee annual returns of 22% to its clients. This was between 2000 and 2011. After spending $5 million to attend Buffett's annual charity lunch in 2010, Weschler joined Berkshire in 2012.
The value of the investor's retirement fund grew by more than 300,000% in 1989 to 2018, despite his IRA losing 52% in 1990 due to two major holdings that fell. Weschler, however, stayed positive and focused on the lessons learned from his unrealized loss.
Sloan was told by him that he believes there is no loss. It's just a lesson to be learned.
Notably, Weschler converted an IRA to a Roth IRA in 2012 and paid over $28 million federal income tax. He won't owe taxes on the money he withdraws from his retirement account because he made the switch.
Sloan was told by Buffett's deputy that he has paid less attention his nest egg ever since joining Berkshire. This is partly due to the fact that there is no overlap between investments he analyses for work and those he would purchase for his account. Buffett's deputy now looks for companies that can absorb $500 million or more without Berkshire owning 10%. This suggests that he is focusing on companies with over $5 billion market capitalization.
Weschler, echoing Buffett's sentiments, highlighted to Sloan the importance of index funds for those who don’t have the time or desire to invest in detail. He said that his $70,535 savings at the close of 1989 would have been worth approximately $1.6 million if it had been invested in Vanguard's S&P 500 Index fund. This is a 23-fold increase.
Weschler stated that $1.6 million is a very good starting point. Maximize the employer match and invest 100% in equities.