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D.Muthukrishnan (Muthu), Certified Financial Planner- Personal Financial Advisor

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How a teacher couple turned $50,000 to $800 million?

Posted by Muthu on May 7, 2018

However rare the occurrence may be, we are able to connect well with real life examples. These examples motivate us to work towards financial independence and create sizeable wealth.

Donald and Mildred Othmer was born in the first decade of last century and lived well into their nineties before passing away in the last decade of the same century.

Donald and Mildred Othmer both belonged to Omaha, where Warren Buffett has been living from his childhood.

Donald worked as a professor in a polytechnic. He had scores of patent to his name. He was a good teacher, researcher and consultant. Mildred worked as a teacher.

They knew Buffett’s family well and trusted in his investment ability.

In 1960’s, when Buffett was running an investment partnership, they invested each $25,000 into the same.

When Buffett closed the partnership and gave the option of either taking the corpus back or converting into Berkshire Hathaway stock, they opted for latter. They got around 14,500 shares at $42 a share. This implies Buffett partnership has multiplied their wealth by over 12 times in a decade.

At the time of their passing away, the $50,000 investment has become whopping $800 million.

The couple did not have children and passed on their wealth to charitable causes.

Donald’s bequest of $190 million to the polytechnic where he worked for nearly 6 decades was about four times the institute’s entire endowment there by lifting the institute to a different league.

Donald and Mildred also provided well for Long Island College hospital in Brooklyn and University of Nebraska-Lincoln, from where both of them graduated.

They also contributed for other causes.

Their example again reinforces the need for buying right, sitting tight and staying the course. They held on to their investments for close to four decades without interrupting the compounding.

Had they not known Buffett and instead invested the same capital in index, it would have still become few million dollars.

As on date, had that $50,000 investment continued in Berkshire, it would be worth more than $4 billion.

Be it index or actively managed funds or portfolio of quality companies what is important is not to get swayed by short term movements, hold for long term and staying the course with patience and discipline.

In my view, we don’t need much brain to make money in a high growth economy with a long run way like India. What is required is capital, which needs to be created out of employment or business or profession, investing the same prudently and then simply staying the course.

Stay the course for next one to two decades and see the results

2 Responses to “How a teacher couple turned $50,000 to $800 million?”

  1. Lalit Khurana said

    Absolutely sir and I have given my commitment in this life to stay with equity come what may….Thank you for sharing this sir and enlightening investors like me through this course…..thnx

  2. […] How a couple turned $50,000 into $800 million (Muthu) […]

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