4 Lessons Warren Buffett Teaches Us About Leaving a Financial Legacy
Warren Buffett is one of the richest people on the planet, and yet his name is not just synonymous with massive wealth (the kind you could swim in, Scrooge McDuck-style), but also frugality and financial savvy. It’s not surprising that this entrepreneur — who worked his way up from his father’s firm to become the chairman and CEO of Berkshire Hathaway — is as famous for his powerhouse investment strategies as he is for choosing a simple McDonald’s breakfast over extravagant meals. Given his track record, it’s clear he possesses wisdom that anyone could benefit from.
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Buffett has made many of his financial decisions, from playing the long game with his investments to his celebrated commitment to philanthropy, with the goal of building a legacy. You don’t have to be as wealthy as Buffett to think about what you want your own legacy to look like. But you can learn from him by following a few key principles, ensuring you can one day look back on your accomplishments with pride.
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1. Be a Lifetime Learner
While Buffett did grow up with certain privileges — his father owned a stock brokerage firm, after all — he wasn’t born into immense wealth. He used his access to his father’s business to educate himself about investing, making his first investments at just 11 years old.
A key factor in Buffett’s success was his ability to identify mentors like Ben Graham, the financial analyst celebrated as “the father of value investing,” and network with them to keep learning. Buffett’s mentors helped shape the investing strategies that would serve him well decades into the future.
Today, growing the kind of wealth you can pass down to future generations is easier than ever. From audiobooks to podcasts, there are countless resources available to help you learn to excel at investing or refine your savings strategies. Experts share valuable insights across social media, and your local library likely has several shelves’ worth of investment how-tos and personal finance books.
You can also turn learning into a family affair, teaching your children and grandchildren about personal finances and investing at a young age, just as Buffett’s father did for him.
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2. Think Long-Term in Your Investments
Buffett is widely regarded as one of the savviest investors of all time. Generally, he’s more concerned with the quality and long-term potential of a company rather than focusing on short-term stock performance.
He’s a big believer in researching companies that spark your interest and evaluating their long-term potential for success. Once you’ve identified a stock you like, wait for it to achieve a reasonable valuation, then make your move. Snap it up, and be prepared to hold on to it for a long time.
As Buffett famously put it in a 1996 letter to Berkshire Hathaway shareholders, “If you aren’t willing to own a stock for 10 years, don’t even think about owning it for 10 minutes.”
His approach has clearly paid off — quite literally — putting him in the position to leave billions to his designated heirs. By adopting a long-term investing strategy that resists panicking with every hiccup in the market, you too could build lasting wealth for your family.
And that wealth doesn’t have to just vanish into thin air when you pass away. By working with attorneys and financial advisors specializing in estate planning, you can ensure that your assets are passed down efficiently. If you want to leave stocks or other investments to a child or grandchild, you can set up a trust with clear management and distribution rules.
3. Be Intentional About How You Distribute Your Wealth
You might assume that being one of Warren Buffett’s children means living on easy street for the rest of your life. But Buffett has made it clear that he has no intention of leaving his children the kind of money that would allow them to sit idly for the rest of their lives.
Another famous nugget of wisdom from the Oracle of Omaha is that parents should “leave their children enough so they can do anything but not enough that they can do nothing.” In other words, provided financial support while still encouraging ambition and self-sufficiency.
Though it’s unlikely you’ll ever achieve reach Buffett’s level of wealth, you can still work with an estate planning team to create a trust with clear parameters for how your beneficiaries can use their inheritance.
As one of the world’s most prolific philanthropists, Buffett plans to put the majority of his fortune into a charitable trust managed by his three children. Instead of receiving the money outright, the Buffett children — who are now in their senior years as well — will have 10 years to distribute the money to charitable causes.
4. Know That Estate Plans Can Evolve
That wasn’t always Buffett’s plan for his fortune. For years, he made significant annual contributions to the Gates Foundation, concerned that his children weren’t prepared to manage such a massive amount of money. However, over time, his confidence in his children’s abilities grew, and he decided to restructure his estate plans.
Remember, your estate plans don’t have to be set in stone the first time you draft them. You’re allowed to make changes as your circumstances change or you gain fresh perspectives on your family’s financial needs. Think of your estate plan as a living document that you can revise as long as you’re, well, alive, ensuring you’re satisfied with how your wealth will be distributed.
Looking to build a legacy? Check out our Life to Legacy guide for expert advice and smart moves you can make today.
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