Here's a 10 point plan to invest like Charlie Munger (2024)

FAQs

What is Charlie Munger's investment strategy? ›

Charlie Munger's investing principles are employed and practiced by investors looking to gain from the market. The concept involves a gradual and steady approach to investing in alignment with market trends, all while mitigating psychological biases that can lead to investment errors.

Warren Buffett once said, “The first rule of an investment is don't lose [money]. And the second rule of an investment is don't forget the first rule. And that's all the rules there are.”

In contrast, Buffett holds top-10 spots on both lists with an estimated $116 billion fortune. Why is Munger's net worth so much smaller? Mostly because Buffett has always owned a much larger Berkshire stake, but also because Munger has sold or donated more than 75% of his Berkshire stock over the years.

The rule stipulates investing 90% of one's investment capital toward low-cost stock-based index funds and the remainder 10% to short-term government bonds. The strategy comes from Buffett stating that upon his death, his wife's trust would be allocated in this method.

Munger counsels, quoting Benjamin Franklin, “If you would persuade, appeal to interest and not to reason.” He continues, "This maxim is a wise guide to a great and simple precaution in life: Never, ever, think about something else when you should be thinking about the power of incentives.” Also, don't expect things to ...

Rule 1: Never lose money.

By following this rule, he has been able to minimize his losses and maximize his returns over time. He emphasizes this so much that he often says, “Rule number 2 is never forget rule number 1.”

"Rule No. 1: Never lose money. Rule No. 2: Never forget Rule No. 1."- Warren Buffet.

Basically, the rule says real estate investors should pay no more than 70% of a property's after-repair value (ARV) minus the cost of the repairs necessary to renovate the home. The ARV of a property is the amount a home could sell for after flippers renovate it.

In the early 2000s, Berkshire Hathaway Inc. Vice Chairman Charlie Munger made a daring yet calculated financial move. He entrusted a significant portion of his family's fortune — $88 million — to Li Lu, often referred to as the Chinese Warren Buffett.

The late billionaire investor Charlie Munger loved Costco, and called himself a "total addict." He served on the company's board of directors, and owned more than 187,000 shares of Costco stock.

Is Charlie Munger a Republican? ›

On July 22, 2002, Munger's first wife Nancy Huggins Freeman died of cancer at age 76. On February 6, 2010, Munger's second wife Nancy Barry Munger died at home at age 86. Munger was a Republican and provided his opinions on a number of political topics including the policies of the Trump administration.

The 70/30 rule is a guideline for managing money that says you should invest 70% of your money and save 30%. This rule is also known as the Warren Buffett Rule of Budgeting, and it's a good way to keep your finances in order.

The 70-20-10 budget formula divides your after-tax income into three buckets: 70% for living expenses, 20% for savings and debt, and 10% for additional savings and donations. By allocating your available income into these three distinct categories, you can better manage your money on a daily basis.

It's used to calculate the doubling time or growth rate of investment or business metrics. This helps accountants to predict how long it will take for a value to double. The rule of 69 is simple: divide 69 by the growth rate percentage. It will then tell you how many periods it'll take for the value to double.

In the the end, it comes down to Charlie's most basic guiding principles, his fundamental philosophy of life: Preparation. Discipline. Patience. Decisiveness.

Warren Buffett is widely considered to be the world's greatest value investor. Value investing prioritizes paying low prices for investments relative to their intrinsic values. A value investor's goal is essentially to buy $100 worth of a company's stock for less than $100 -- ideally, much less.

As of March 31, 2024, these four stocks constituted the entirety of Munger's portfolio, with Wells Fargo and Bank of America being the largest holdings, accounting for 46.22% and 42.80% of the portfolio, respectively. Alibaba Group (15.35%) and U.S. Bancorp (2.81%) made up the remaining portions.

Munger believes that by learning to recognize certain dysfunctional decision-making processes, an investor can learn to make fewer mistakes. He also believes that no matter how hard someone works and learns, mistakes cannot be completely eliminated.