Could Investing $10,000 in Berkshire Hathaway Stock Make You a Millionaire?

Few would argue that Berkshire Hathaway (BRKA 0.29%) (BRKB 0.53%) isn’t a solid investment choice. But millionaire-making potential with a meager starting position of only $10,000? That’s just a bridge too far.

Or maybe it isn’t.

Incredible historical returns

Warren Buffett produced market-beating returns from Berkshire Hathaway shares over the long term. His ultra-patient, deep-value style of stock picking clearly works and will likely continue to work under current CEO Greg Abel’s leadership.

But can the stock turn a $10,000 investment into a $1 million position in a single lifetime? That’s precisely what happened with the company’s initial public offering of its A shares at $290 in March of 1980; its current price is near $733,000. So a $10,000 investment in its initial public offering (IPO) would be worth a little more than $25 million today.

But it’s a gain that comes with a major footnote: The stock got off to a fantastic start well before Warren Buffett became known as the Oracle of Omaha for his investing prowess.

Probably, few people would have actually been willing to make such a bet early on. For perspective, a more plausible $10,000 investment in the same ticker made just 30 years ago — after Buffett became an investing legend — would only be worth a much lower $230,000, give or take.

Still, that’s more than the S&P 500 would have dished out during that stretch, even when reinvesting its dividends (which Berkshire doesn’t pay). It’s a testament to the power of compounding good returns year in and year out, which Berkshire essentially does by reinvesting its profits rather than immediately passing them along to shareholders.

It’s possible, but…

So the question remains: Could investing $10,000 in Berkshire Hathaway today make you a millionaire?

It’s possible, although it largely depends on the amount of time you’re able to stick with it. If you’re looking to do it in 30 years, it would require average annual returns of nearly 17%, which, even by Berkshire’s typical yearly returns these days, is unusually high. If you have 40 years to wait, however, it can be accomplished with average annual returns of just over 12%, which isn’t out of the company’s reach, even if some of those years are off years.

Just remember that — as is the case with any investment — most of whatever net gains you’re going to achieve by owning this stock will only materialize during the final one-third of whatever your savings period is, when the compounding of previously accumulated gains kicks into high gear. If you look closely at any long-term chart of this ticker, you’ll see its ascension is constantly accelerating.

So you’ll want to make whatever trade you’re going to step into as soon as you can possibly do so, since time still does most of the work here — even for Berkshire Hathaway.