In this article, I will address some of the key questions about Warren Buffett including…
- When did Warren Buffett start investing?
- How does Warren Buffett make his money?
- How Did Warren Buffett make his first million?
- When did Warren Buffett become a millionaire?
Long story short, Warren Buffett did not make his first million through diversification.
Warren Buffett’s background
Buffett was born on August 30, 1930, in Omaha, NE. He is considered one of the most successful investors in the world and has a net worth of over $140B as of 2024.
In 1954 at age 24, one of his first jobs was working at Benjamin Graham’s investment partnership for a salary of $12,000/year USD (Over $140,000/year in today’s dollars).
Graham was one of Buffett’s professors at Columbia Business School and he wrote the popular investing book, The Intelligent Investor.
In 1957 at age 27, he bought his five-bedroom stucco house in Omaha, NE, for $31,500 (Over $350,000 in today’s dollars). He still lives in the same house as of today.
In 1959, at age 29, he met his future business partner Charlie Munger.
Warren Buffett’s First Business Venture
In 1956, Benjamin Graham retired and closed his partnership, and Buffett established Buffett Partnership Ltd, which was a wealth management firm that owned private companies as opposed to public companies (stocks).
Unlike today where most wealth management firms charge approximately 1% – 2% AUM (Assets Under Management), Buffett charged 0% AUM but took 25% of any commissions beyond 6% cumulative return.
The firm’s average returns from 1957 through 1968 were 31.6% with no negative years.
His strategy, as learned from Benjamin Graham, was to buy a small portfolio of 10 – 30 great businesses. In other words, great businesses with strong financials.
One key to finding great businesses is to calculate the Fair Value (intrinsic value) of a stock and make sure you buy that stock for 50% off or in other words, a 50% Margin of Safety. Essentially it’s like buying $10 bills for $5.
See this article on how Ben Graham calculated Fair Value.
See this article on how Tykr calculates Fair Value.
Warren Buffett’s First Million
So how did Warren Buffett make his first million?
With Buffett Partnership Ltd, he owned a small focused portfolio of businesses and kept investing in those same businesses over time. The key word is “focused”. At this point in his life, he did not diversify.
By 1962 at age 32, his net worth exceeded $1 million dollars (Over $10M in today’s dollars).
As we all know, his momentum of wealth-building had just begun.
In 1962, he began buying shares of Berkshire Hathaway, which at the time was a textile (fabric) manufacturing company founded in 1839.
In 1964 Berkshire Hathaway’s stocks were dropping due to the textile industry decline. Buffett decided to seize the opportunity and buy majority ownership of Berkshire Hathaway.
In 1969, at age 39, Buffett closed down Buffet Partnership Ltd because he admitted to his investors that he had run out of good ideas to beat market returns. He decided to focus his attention on building the share price of one company on his own, Berkshire Hathaway.
Fast forward to 1985, the last textile operation under Berkshire Hathaway was shut down however, he kept the name Berkshire Hathaway.
Berkshire Hathaway’s Growth
Berkshire Hathaway eventually turned into a conglomerate that would buy and hold companies including GEICO, Duracell, Dairy Queen, Fruit of the Loom, and Pampered Chef. Berkshire Hathaway also owns shares in public companies including Kraft Heinz, American Express, Coca-Cola, Bank of America, and Apple. Today you may purchase shares of Berkshire Hathaway under ticker symbols BRK-A or BRK-B.
In 2010, Buffett claimed that purchasing Berkshire Hathaway was the biggest investment mistake he had ever made and claimed that it had denied him compounded investment returns of about $200 billion over the subsequent 45 years. Buffett claimed that had he invested that money only in insurance businesses instead of buying out Berkshire Hathaway, those investments would have paid off several hundredfold.
In 2025, BRK-A trades at over $700,000 per share, and BRK-B trades at over $400 per share. Essentially, BRK-B allows you to invest in Berkshire Hathaway with a much lower barrier to entry.
Over time, Berkshire Hathaway continued to buy more stocks and transition from “wealth building” to “wealth protection.”
As of 2025, Berkshire Hathaway owns over 40 stocks and has a market cap over $1 trillion.
As taught by Warren Buffett…
- Wealth building = Own a focused portfolio of 10 – 30 stocks
- Wealth protection = Own a diversified portfolio of 30 stocks or more
Do you want to build wealth like Warren Buffett? If so, you may join Tykr for free.
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