Warren Buffett's house is the object of endless fascination when people learn about him -- and for good reason. Buffett is one of the richest people in the world; therefore, it's always surprising to learn that he's lived in the same house for most of his adult life.
Looking more closely, Warren Buffett's house can teach you a lot about success and what's important in life. Read on for more.
Warren Buffett bought his house in Omaha, Nebraska in 1958 for $31,500. The house is stucco, and has five bedrooms and 2.5 baths. Warren Buffett has called his house "the third best investment" he ever made, behind only wedding rings.
In reverse order, here are the biggest lessons we can learn about success from Warren Buffett's house.
5. Wealth is about what you don't see
What does Warren Buffet's house tell you about how much he's worth? Nothing. What does the house below tell you about how much the owner is worth?
Still nothing. The above is a depiction of the soon to be completed largest home in America. It's the subject of the documentary, "The Queen of Versailles," which talks about how the owners fell into financial trouble during the financial crisis.
Most people's idea of wealth isn't someone who has a million dollars in the bank; it's of someone spending a million dollars. Too often, people confuse the trappings of wealth with actual wealth.
Warren Buffett is now worth an estimated $68 billion. You can't tell how much someone is worth from his or her house or car. Wealth is about what you don't see.
4. Why you buy a house
Warren Buffett's house is the same house he originally bought; but it was not a financial investment in the sense that Warren's goal wasn't appreciation in value. Warren bought a house he could afford, and has called it one of his best investments because, "My family and I gained 52 years of terrific memories with more to come." Warren didn't lose sight of the idea that a home is for living in rather than for speculation on housing prices. When you mix the two, bad things can happen.
3. Possessions don't bring happiness
One thing you may notice about Warren Buffett's house is that there is only one. As Warren Buffett wrote in his Giving Pledge:
Some material things make my life more enjoyable; many, however, would not. I like having an expensive private plane, but owning a half-dozen homes would be a burden. Too often, a vast collection of possessions ends up possessing its owner. The asset I most value, aside from health, is interesting, diverse, and long-standing friends.
2. Stocks are better investments than real estate in the long run
"All things considered, the third best investment I ever made was the purchase of my home, though I would have made far more money had I instead rented and used the purchase money to buy stocks," says Buffett.
On a purely financial level, data shows that, over the long term, houses do not return much above inflation, while the stock market generally does. Robert Shiller has collected home price data in the U.S. as far back as 1890. On an inflation-adjusted level, home prices have not risen much.
Compare that to the stock market where, during the past 50 years, stocks have crushed inflation.
1. Success has nothing to do with the house you live in
There are many definitions of success, but the size of your house has nothing to do with it. While life will have its ups and downs, continuous learning, thinking for yourself, developing good habits, focusing on the long term, and having fun on the journey, is what you need to set yourself up for success in life. It's as simple as that.
Dan Dzombak can be found on Twitter @DanDzombak, on his Facebook page DanDzombak, or on his blog where he writes about investing, happiness, life, and success. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.