Warren Buffett is no stranger to giving advice.
For decades, Berkshire Hathaway’s chairman has sat in front of packed rooms at his company’s annual shareholder meetings, answering investors’ questions about everything from artificial intelligence to the ins and outs of insurance to marriage advice.
On “Warren Buffett: Life and Legacy,” airing Jan. 18 at 3 p.m. ET on CNBC, Becky Quick asks the Oracle of Omaha about the toughest question and best advice he’s ever been given. Mr. Buffett finally arrives at the challenge he once posed to college students.
Mr. Buffett asks his students to consider a scenario in which they have about 300 classmates and could receive 10% of the lifetime earnings of five of them. Who will they choose and why? And who will they sell short? He says the person you choose isn’t necessarily the best-looking, the smartest, or the most athletic.
“Of course, as I explained at the end, you can be the person you buy,” Buffett says. “Nothing is impossible, because it’s not about whether you can throw a football 60 yards or not, and it’s not about being the person with the highest IQ. It’s about being one of the five guys.”
How to get on the list
So what puts you on the list of people with the highest expected lifetime income?
“It’s mostly luck. If you choose the right parents, you’ll be wealthy when you get out,” Buffett says. “You won the lottery, the ovarian lottery.”
But Buffett told students that you too could be part of the room where your classmates should bet.
“You can do that by being a good person, reading a lot, and spending less than you take in,” he says. “I told them they can spend 110 percent of the money they earn once, but after that they spend it. The rest of their lives are underwater.”
Buffett always emphasizes the latter point. Buffett says that while certain types of loans, such as mortgages, may make sense in some cases, people generally want to avoid taking on debt.
“Beyond a certain point, if you get into a hole or something, it becomes difficult to dig out,” he says. “It’s not that it’s impossible. I believe people have accomplished it. But do it the easy way.”
Of course, you won’t end up being the top earner among your peers unless you work hard and focus on self-improvement, Buffett says. He recalls his longtime partner Charlie Munger’s habit of “selling himself” during the most productive time of the day. You spend an hour each morning focusing on improving your thinking, and then spend the rest of your work time pitching to clients.
“That’s not crazy,” Buffett said. “Your future is your future and you can’t expect it from anyone else.”
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