Wealth inspiration #46
Wisdom can often come in small packages, and wisdom about building wealth is no different.
Today’s quote is from Charlie Munger, vice-chairman of Berkshire Hathaway and Warren Buffet’s right-hand man:
“There is no way you can live an adequate life without making many mistakes.”
Like so much that comes from Munger, this is such a simple, but powerful idea.
If you spend your life focused on avoiding mistakes, you will struggle to do well.
- can you invest in the stock market, even in low-cost index funds without sometimes having “bad timing” causing you to lose a lot of money on paper?
- will you likely get a great deal on your first real estate investment when you just start or are you more likely to pay retail price?
- are you likely to know the perfect product and who your perfect customers are when you first start a new enterprise?
Some real-life examples:
- Sony’s first product was an electrically heated cushion that often caught fire (Sony is now worth $110 billion)
- When Buffett bought Berkshire Hathaway, it was a struggling textile mill that eventually went out of business (Berkshire is now worth $670 billion)
It took time, perseverance, and a drive to learn from their mistakes, but these companies eventually became spectacular successes.
The lesson is that if you try, you will make mistakes, but not trying is the biggest mistake of all.
I’ve made several myself on the way to building wealth:
- I paid the first several real estate properties at the retail price before I learned how to buy houses at a discount to the market price
- We purchased our first commercial property without doing sufficient due diligence, leading us to buy a place in a weaker location than we realized
- My first attempt at a side hustle failed and cost me quite a bit of money (details here)