Warren Buffett Is Turning 90 -- He's Given Us 3 Big Presents

On August 30, Warren Buffett turns 90. He's arguably the world's greatest living investor and certainly a candidate for any greatest-of-all-time title. Under his leadership, his company Berkshire Hathaway (BRK.A 0.64%) (BRK.B 0.54%) has seen its shares grow in value by more than 2.7 million percent -- a 2,744,062% gain from 1964 through 2019. That's a compounded annual gain of more than 20%, enough to turn a modest initial $1,000 investment into about $21.6 million. On Forbes' 2020 list of the richest billionaires, Buffett came in at No. 4, with $67.5 billion.

A guy who can deliver performance like that deserves some great birthday gifts, no? Well, Buffett has actually given all of us some great gifts. Here's a closer look at them.

Image source: Getty Images.

Gift No. 1: Tens of billions of dollars for charity

You might have read in July that Buffett gave away $2.9 billion -- which is a massive charitable donation. What you may not realize is that he's been making huge donations like that for many years.

In 2018, he gave away $3.6 billion in stock, enough to land him in the No. 2 spot for the biggest donations of the year worldwide, per Forbes. In 2017, he gave away $3.2 billion, and in 2016, $2.9 billion. (In any given year, most of the top 10 charitable gifts are in the millions, not billions!) So far, Buffett's gifts have totaled roughly $37 billion.

This year's gift was his 15th annual one since 2006, when he made the big announcement that he would be giving away about 85% of his great wealth -- starting then and not upon his death, as he'd originally planned to do. The lion's share of his annual gifts go to the Bill and Melinda Gates Foundation -- which is kind of unusual, as many wealthy folks like to set up their own foundations and donate to them. Buffett, instead, admired the Gates Foundation so much that he figured that it was best suited for effectively using his money.

And effective it is, spending more on global health than the World Health Organization, per Vox.com, while also spending in areas such as education and economic growth.

Gift No. 2: The Giving Pledge

Above and beyond those hefty ongoing gifts above, Warren Buffett teamed up with Bill and Melinda Gates and created the "Giving Pledge" in 2010 -- an initiative to get as many fellow billionaires as possible to commit to give away the majority of their wealth to charity. To date, more than 200 billionaires from around the world have signed on.

A notable addition to the list in 2019 was MacKenzie Scott, the former wife of Amazon.com founder Jeff Bezos. This year, she gave $1.7 billion to 116 organizations promoting racial equity, LGBTQ+ equity, gender equity, economic mobility, functional democracy, public health, global development, climate change, and empathy and bridging divides.

Certainly, many wealthy people would have been donating to charity without the Giving Pledge. But it has made a meaningful push to get more of them thinking about how to put their wealth to good use, and that will certainly benefit society. So thanks, Mr. Buffett (and Mr. and Mrs. Gates)!

Gift No. 3: An education in investing and life

Finally, another big gift Warren Buffett has given the world is an education -- in investing and in life. He has done so via countless interviews and question-and-answer sessions, via his lengthy (but very accessible) annual letters to shareholders, and via the example of his well-lived life. Even his quips, when taken to heart, can often leave us better off.

Buffett makes a point of meeting with student groups frequently, answering their questions and sharing his wisdom. Along with his partner Charlie Munger, Buffett spends about five hours answering questions each year at his annual meeting. His annual letters to shareholders have often exceeded 20 pages and are written as if he's writing to his sister, explaining how the company has been performing and sharing his views on various issues of the day, along with dispensing investment advice.

One piece of advice that most of us would do well to heed is to invest in index funds. It's hard to argue with that, as they have outperformed more actively managed mutual funds over most long periods. You can't reach with index funds the height of returns that Buffett has, but here's how they could build your wealth, assuming an average 8% annual growth over your investing period:

Source: Calculations by author. 

Buffett has described Berkshire Hathaway, his company that he loves dearly, as a painting that he keeps working on -- adding companies to it over the years, along with their managers, who he holds in high regard. For decades, he has offered the business world a great example of how a successful company can be run -- while not only rewarding shareholders, but also respecting them, informing them candidly of company progress, and answering many of their questions.

The example of his life is also instructive. Buffett claims to have won "the ovarian lottery" -- being born in the right time and place for putting his particular skills to work. He's spent decades doing what he loves, on his own terms. He's built a great business and chooses to spend much of his time reading annual reports, books, and news stories; talking with friends and colleagues; and relaxing by playing bridge with friends such as Bill Gates. He still lives in the same Omaha house he bought in the 1950s and doesn't surround himself with much flash -- except when he travels by private jet (through NetJets, another company he owns).

Buffett has always sought to grow his money, but he isn't planning on taking it with him or simply giving it to his loved ones. Most of his great wealth, along with his lessons on stock investing and life, are gifts to us. Here's hoping for another 90 years of shared wisdom.

Happy birthday, Mr. Buffett!