4 Things Gen Z Can Learn from Charlie Munger

Meme stocks might look attractive, but the investment strategy of Berkshire Hathaway vice chairman Charlie Munger can provide some helpful advice for young investors

Maximillian Loth 19 July, 2021 | 9:15AM
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Warren Buffett and Charlie MungerSome of us might not even have heard of the name Charlie Munger, but everyone is aware of the investment guru Warren Buffet. Munger is Buffett’s right hand man and together they have experienced unparalleled success, building an investment firm with more than $880 billion in assets. The investment principle that brought them this remarkable success is known as value investing, a concept originally developed by Benjamin Graham. But why should young investors in their mid-twenties follow a long-term-oriented value investing strategy?

When I asked myself that question, being a 22-year-old International Business Graduate and Morningstar Intern, I first thought of incredible success stories like GameStop or Tesla and my willingness to take risks as my retirement is 45 years ahead. At the height of the Gamestop furore in January this year, its share price rocketed 2,500%, which is very appealing for any investor.

But at the same time, I started to consider the unique power of a sustainable long-term investment strategy which can be visualised in the following simplified example: If I would invest $5,000 today at the 9.18% annualised return of the MSCI World Index of the last 50 years, I would have more than $260,000 at my retirement in 45 years, according to Morningstar Direct data. This represents over 52 times my initial investment. It’s no wonder Albert Einstein once said: “Compound interest is the eighth wonder of the world. He who understands it, earns it, he who doesn’t, pays it.” 

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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Maximillian Loth  Maximillian Loth is an intern at Morningstar Switzerland

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