Berkshire Hathaway Investment Plan – 2nd Anniversary

That pocket change just keeps piling up.

As a demonstration to show how small amounts of money can turn into larger amounts of money (i.e. the power of compounding), in April of 2014 I created a portfolio that consists exclusively of Berkshire Hathaway stock.  The rules are:

  • Only investments in Berkshire Hathaway stock can be made
  • The capital must come from my “lunch money” alloted in the OMM family budget
  • Loyal3 or a similar fee-free platform should be used, since brokerage fees on small deposits would significantly eat up capital

Now, two years later, the results are starting to become meaningful.  The portfolio amount is now up to over $560.


The vast majority of this is contributions, not investment gains, just to be clear.  So far I’ve invested $531 into Berkshire stock.  So, that’s a roughly 2.7% annual rate of return.  Nothing to write home about, but also nothing to really take note of either, with a time horizon of only 24 months.  I imagine over a 5-10 year period the amount of gains in the account will start to be significant, if history is any guide.

In related news, I got my first physical copy of the Berkshire Hathaway annual report mailed to me this year.  I haven’t yet gone through it in its entirety, but the first dozen pages or so were interesting; essentially a good reminder of the businesses Berkshire Hathaway owns and how they make money.  You know, typical Buffet stuff.

Although there’s no way I would have been able to make it to the annual shareholder’s meeting in Omaha this past weekend, it was kind of nice to get the shareholder credentials in the mail with the annual report and see them.  Hopefully one day I’ll get to go before Buffet or Munger passes away.  Then again, people have been saying they’ve been on their last legs for years now, but they both seem to be in good health.  We’ll have to see though – in the meantime I’ll just keep learning about the businesses that Berkshire owns and slowly collecting more ownership with my pocket money.

Face to Face with the 1%



At a reunion at my alma-mater, I had the opportunity to partake in a professional panel event where some older, experienced gentlemen in my social circle dispensed wisdom on wealth and life.  The event was particularly notable to me because all of the panelists were black men who had been extraordinarily successful in their chosen endeavors.  As a black man myself, I realize how rare this is within our community.  It is always so refreshing to see those who come from the same place you come from go out in the world and be successful, particularly when the overall statistics for the professional success for black males is not particularly in our favor.

I have enclosed my notes from the event below, with significant portions redacted to ensure privacy and to focus on one key question asked of the panel, “How do you define wealth?”

The moderator opened up by introducing the panelists:

Panelist #1: consultant and CEO (multiple companies)

Panelist #2: Executive VP, Fortune 500 company

Panelist #3: Corporate VP, Fortune 500 company

Panelist #4: Rhodes Scholar, startup founder

Panelist #5: self-made entrepreneur (multiple companies)

The moderator framed the first question in the context of three life phases: early adulthood (up through the end of college and graduate schooling), career and family (generally 20s, 30s, and 40s), and later life (50s to “whenever”).

How do you define wealth?

A distinction was made between wealth and income. The panelists agreed that income is cash flow that you receive for the work that you do or the work that your assets do. Wealth is an accumulation of savings that are well invested and that grow over time. Wealth was also defined as freedom to do whatever you want to do with your life.

Panelist #4 noted that he and his wife have always lived well below their means, and were able to have much more flexibility throughout their professional careers as a result.  He stated, “You set yourself up in a position where you are able to choose the job that you want, not be forced to have the job choose you.”

This was seconded by the other panelists. A brother from the audience recommended the book The Millionaire Next Door by Thomas Stanley as good reading material that expands upon this concept.

There was also discussion about how investing your surplus savings wisely is incredibly important. Panelist #5 talked about how diversification has a place for the preservation of wealth, but is not very useful as a concept for building it. He advocated making focused, concentrated bets on yourself in an area in which you are highly competent. The implication was that when you have already achieved the necessary growth to reach your goals, then diversify.

Panelist #2 stated that there was no overall, planned out strategy with regards to his method of investing. Instead, he trains himself to see opportunities when they come up, and then acts upon them. He gave an example of early in his career, when he met a young Spike Lee and invested with him to produce the movie She’s Gotta Have It (his second film). He invested [X] and it yielded a [Y] return for him personally.

Panelist #2 also talked about the perception of how people achieve their wealth, especially among the black community, is also very skewed. He mentioned that one day he was having a package delivered to his home (all homes in the neighborhood are worth well over $1 million). The delivery man was a brother, and upon delivering the package remarked at how nice the neighborhood was and asked emphatically, “how many athletes live over here?”

Follow up question: How much money would you consider wealthy?

The panelists generally did not give their opinion on any specific number. Panelist #5 made an important point that “wealth is not really just a number, it’s a quotient”, meaning that you have to consider what “enough” is for you personally. Otherwise, as he said he did in his younger years, “you set the bar at one place and then when you reach it you simply keep raising the bar higher”. Panelist #5  noted that he had retired multiple times from his various business ventures, but kept coming back to do something new, demonstrating that no matter how much money we have, we all need a purpose in life.

There was a question from the audience about whether anyone would recommend seeking the services of a financial advisor as way to help accumulate wealth. No one responded enthusiastically for the idea, and Panelist #5 stated that “no one will care about your money more than you do.” There seemed to be agreement that educating yourself about your money and what it is invested in is paramount to hiring someone else to do the thinking for you.

Panelist #5 also expressed that selling your time for money can only get you so far along the spectrum of financial success. Those who are ultra-wealthy have businesses and build systems that leverage the work (and money) of other people.

Although no one dropped an explicit number of what they considered wealthy, the idea was kicked around that many people will “only make it to the one or two million dollar level”, as far as net worth goes. This implies the ambitions of these men have reached/will reach hectomillionaire or billionaire status.

Follow up question: How do you pass on wealth – is there a legacy to leave financially?

Those on the panel who have children seemed pleased with their financial success in that they could provide for their children (particularly with education-related expenses), but admitted they were nervous about the mismanagement of wealth they had built in future generations. They seemed aware of the fact that most (around 80%) of wealth is lost by the third generation (one of the panelists quoted this).

Those without children indicated that they often pass on their wealth through philanthropic efforts. They also give to close family members’ children (nieces and nephews) in order to pay for their higher education, or to assist with business ventures.

[rest redacted]

I found this portion of the conversation alone to be very powerful.  Here I was, sitting in a room face to face with some of the wealthiest and most successful black men – and people period – in the nation.  This was the 1%.  Although I have read many personal finance books written by “gurus” and various other others, I found it quite refreshing to get some no-nonsense opinions about wealth in general and what it takes to become wealthy.

The point about differentiating wealth and income is so, so true.  If income is not gradually inventoried into wise investments and savings, then there is no possibility of wealth down the road.  It simply cannot happen.  I don’t care if you sign a multi million dollar contract with an NFL team tomorrow, if you spend all of your income on consumable items, taxes, and Lord knows what else, there will be no wealth being built.

I already really like the point about defining “enough”.  What is enough?  That is a question I have been kicking around in my head for some time now.  Defining how far you are willing to go to achieve a certain level of financial independence is in my view, very important.  Otherwise you’ll be chasing your tail and end up unfulfilled, ultimately.  I talked about this some time ago, making the point that it is very important we put a clear price on our dreams.  If we don’t know what we actually want – how will we know when we’ve got it?  A deep thing to think about, indeed.

My other favorite point was the shunning of traditional “diversify, diversify, diversify” advice that is so prevalent in the financial media.  It is so much more worthwhile to focus on areas of extreme competence, and put your energy into productively utilizing that competence.  This echoes some of Thomas J. Stanley’s work, where he recounted how many of the wealthy people he interviewed told him that, although they invest in many things, their primary focus has been their vocation and growing their business.

The gentleman on the panel who made this comment successfully started multiple ventures throughout his career.  After the panel, I looked up one of his businesses, and this guy isn’t messing around.  It made me reflect a bit – if diversification as a concept was really that important for wealth building, wouldn’t more people that invest out there be rich?  So many people tout mutual funds, for example, as being generally “safe investments” because they often have 100-200 separate holdings.  Well, what if 150 of those companies have mediocre financial performance or are downright terrible?  What if 50% of the funds assets are concentrated in the top 10 or so holdings?  Does that really serve the needs of the investor well?  It’s certainly food for thought.

It was a great discussion, and I’m glad I was able to attend.  It reminded me that there is so much wisdom out there that other people have – it’s our responsibility to always keep our eyes and ears open so that we don’t miss opportunities to learn something new and to challenge our thinking.  Little nuggets of wisdom, added up over time and applied well, can lead to extraordinary results over the course of one’s life.

Ownership is King

When I was in college, I had a friend that introduced me to the My Coke Rewards program.  If you’re not familiar, it’s a program from the Coca-Cola company, where, by collecting codes printed on various Coke products, you can earn points and eventually redeem them for prizes.  So, every time I or a friend got a Coke from one of the dorm vending machines, or bought a 2-liter at the nearby convenience store, I could enter the code on the cap and get a few points for it.

This started when I was say, a sophomore.  Whenever I saw an empty bottle at the top of the recycling bin, I grabbed the cap.  Whenever a friend was done with their soda, I’d ask for the cap.  Being a natural saver, it wasn’t long before I ended up storing a decent pile of caps each week.  Periodically I’d go through them, enter the codes on the rewards website, and toss the used caps in the trash.  I figured, with enough diligence, I’d be able to get some sweet prizes in the long run.

This process went on for about two years.  I never spent any of the points.  At the time, Mrs. Mase was making fun of my cheapness (and rightly so, as I realized later!)  Eventually, I had accumulated enough to get what looked like at the time, a decent prize, which were some in-ear headphones.  I listened to music constantly walking around campus, and my headphones had to be replaced frequently (couldn’t afford high quality ones, so the cheapest had to do).  Why not, right?

Finally, one day I cashed in my points for the headphones and waited.  When my package arrived a few days later, I excitedly unwrapped the headphones and put them to work on my iPod.  As soon as I started listening I thought, “these are the most uncomfortable, cheapest sound quality earphones I’ve ever used!”

Fast forward a few years to the point where I’m out of college now.  Life is going well, I’m a little more mature financially and I had started reading about assets, investing, and dividend paying stocks.  My wife and I purchased our first stock by buying Coca-Cola when it had dipped to around $38 per share.  With the dividend yield historically high, and the quality of the company unparalleled, I figured it couldn’t be a bad idea.  That was in February of 2014.  As I write this in October of 2015, we have received a total of seven dividend payments from the company, totaling $65.61.  The payments grew from an initial first payment of $8.85 to the most recent payment of $10.02.


It may not seem like much, but that is real money flowing into my family’s accounts.  All dividends were reinvested, and no more money was put in after the initial purchase was made.  All by itself, the income grew 13% over this 2o month time period.  Most of that was from a dividend raise by the company (about 9%) and the rest was from the process of dividend reinvestment.

I remember when that first dividend payment hit the account.  It was a real eye opener for me.  All of those years, I had scrimped and saved for those My Coke Rewards points.  Now, here I am as an owner of this great enterprise, collecting money for my ownership.  Wow, I really wish I had been buying KO stock with my money back then instead of wasting time collecting bottlecaps!

Economically, ownership is king.  Promotional deals and programs like the one I participated in are simply ways for a company to cement brand loyalty and increase customer engagement.  In order to receive a higher level of economic benefit, instead of participating in this program, I shifted to becoming a part owner of the program.  Not only that, but my family is now a part owner of the entire Coca-Cola business.  Sure, our ownership is small right now, but it is a self-reinforcing cycle of wealth creation and that is what matters.

One day, I believe my family will own thousands, if not tens of thousands of shares of this company and others like it.  When you lay a claim to an ownership of the profits of an enterprise, you’re the one that gets the risk if things go south.  However, you’re also the one that reaps the rewards when the profits roll in.

Right now, the Old Man Mase family is focused on paying off debt, so no more stock purchases (other than the BHIP) for quite a while.  It does make me laugh though, to look at the account statements now and realize that we’re now getting paid by the same company that I used to run around circles for with their promotional programs.  By placing yourself at a different place in the economic food chain, you set yourself up to reap greater rewards in the future.  It’s the old adage about living on the economy, rather than in the economy, that counts financially.