| PeanutButter | 05-04-2014 05:54 PM |
Man Asked Neighbor To Manage His $67,000 savings. Guess Who That Neighbour was?
In 1965, A Man Asked His Neighbor To Manage His Modest $67,000 Savings. Guess Who That Neighbor Was... | Celebrity Net Worth Quote:
In the mid 1960s, a husband and wife named Dorothy and Myer Kripke faced a difficult problem. A problem that is fairly common for many middle-aged couples. How do you properly plan for retirement? Dorothy and Myer were actually way ahead of most of their peers when it came to retirement planning. Thanks to diligent saving habits and a small inheritance, by 1965 they had managed to sock away roughly $67,000 which is equal to roughly $500,000 today after adjusting for inflation. That was the good news. The bad news was that they now needed to protect and grow the savings so it would still be there when they were ready to retire in a decade or two. After months of stressful debating, Dorothy offered her husband some simple advice:
"Myer, invest the money with your friend, Warren."
This friend Dorothy was referring to was a neighbor who had recently gained a good local reputation for managing money in their small town of Omaha, Nebraska. The Kripkes had come to know the man over casual bridge games and family get-togethers at holidays. Myer was too embarrassed to ask for help, but eventually relented. The neighbor, Warren Edward Buffett, agreed without hesitation. Guess how this story turns out…
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As you have probably ascertained by now, Dorothy and Myer Kripke accidentally stumbled upon a man who would eventually be considered one of the greatest financail investors of all time. A man whose local investment business would one day manage roughly $500 billion in assets. A man who is the fifth richest person in the world today with a personal net worth of $58 billion. Of course, we are talking about the Oracle of Omaha himself, Warren Buffett.
Myer Kripke was very hesitant at first to ask the young upstart money manager to handle their life savings. For one thing, Myer thought it would be seen as a major imposition. Secondly, Myer worried about mixing business and friendships. But most importantly, Myer knew that at the time Warren's minimum investment limit was $150,000. So there was no point in even bringing it up!
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Thankfully, Dorothy didn't let those hesitations get in the way. But believe it or not, Myer resisted reaching out to Warren for THREE YEARS! Finally, Myer relented. Warren agreed to manage the money without hesitating for a second. In Warren's own words:
"I liked Myer [and] I wanted people who if it went bad, we could still be friends."
Fortunately for both men, things did not go bad. Over the next thirty years, Warren's business expanded and at exponential pace. And along the way, Myer and Dorothy Kripke's $67,000 life savings ballooned just as quickly. In Myer's own words:
"We got in fairly early with a modest amount of money. Then it mushroomed like an atomic bomb."
Pretty soon, the Kripkes were millionaires. Then multi-millionaires. Incredibly, by the mid 1990s, their $67,000 life savings had mushroomed into more than $25 million (roughly $40 million after adjusting for inflation).
As they became wealthy, Myer and Dorothy continued to live a very humble life. They even continued living in their modest three bedroom Omaha apartment that cost just $900 a month! Myer, an ordained rabbi, even continued working at his local synagogue earning a salary of $30,00 a year.
The Kripke's biggest indulgence turned out to be philanthropy. Throughout their lives, this amazing couple donated millions of dollars to a number of charities. They donated $7 million to help rebuild a library at the Jewish Theological Seminary in Manhattan. The Kripkes first met each other as students outside this very same library decades ago. They eventually donated an additional $8 million to their alma mater.
Dorothy Kripke died in September of 2000 at the age of 88. Myer Kripke died this week at the age of 100. Hat tip to the NYTimes for helping us learn of this incredible story.
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