3 investment lessons from the late, great Charlie Munger

Charlie Munger will be remembered for his investment wisdom and philosophies that will live on and continue to stand the test of time.

| 3 min read

Charlie Munger, one of the great all-time investors, sadly lost his life recently, aged 99.

As Warren Buffet’s right-hand man, Munger successfully ran the famous US investment company Berkshire Hathaway. Now one of the largest companies in the world, with a market capitalisation of around $770 billion.

Over the years, many investors would tune in to watch Berkshire Hathaway’s Annual General Meeting (AGMs), where Munger became well-known for his infamous quotes and insightful investment wisdom.

Here are some of the most well-known quotes by Charlie Munger that can teach us valuable investment lessons.

Investment lessons that Charlie Munger taught us

1. Life-long learning is paramount for success

“Spend each day trying to be a little wiser than you were when you woke up.”

Munger was a big advocate for continuous life-long learning and he believed it was paramount for success. The day you think you know it all, is the day you start to fall behind.

Munger’s investment approach was focused on quality over quantity. He spent the majority of his days reading through companies’ annual reports to find the greatest investing opportunities across the investment universe.

Munger believed that even spending 15 minutes reading here or there could add up, especially if you have a long run ahead of you. Which brings us nicely onto investment lesson number two.

2. Compounding

“The first rule of compounding: Never interrupt it unnecessarily.”

Munger wasn’t necessarily the best stock picker in the world. He had lots of losers, as well as winners, and didn’t always achieve the highest investment returns each year.

What made him a great investor was that he understood the power of compound interest.

He didn’t make his billions from buying and selling shares daily. He made it from waiting for compounding to work its magic.

And he knew never to interrupt it unnecessarily – patience is the key to investing success.

Compounding is often something that goes unnoticed when your first start out investing. But when you start to add investment returns on top of investment returns, year after year, things can quickly start to snowball.

It’s estimated that Munger’s business partner, Warren Buffet, accumulated 99% of his wealth after his 50th birthday - that’s the power of compounding.

3. Live within your means

"Live within your income and save so that you can invest."

Charlie Munger was a big believer in living within your means. That way, you have more money spare to invest which can make you more money as we’ve seen with compounding.Just because your household earnings can stretch to buy a new car, or perhaps a bigger house, doesn’t mean you should do it. The hardest thing about seeing an increase in your household income is not immediately changing your lifestyle to match.With Charles Stanley, you can start investing today from as little as £25 a month via Direct Debit. This creates good saving habits and takes the emotion out of investing.

There’s no doubt that Charlie Munger will be sadly missed, but his investment philosophy will live on forever.Investing isn’t about being the brightest light in the room. As Charlie Munger’s quotes on investing show, it’s about staying on the longest by following straight forward and simple investing principles.

Start investing today

    Nothing on this website should be construed as personal advice based on your circumstances. No news or research item is a personal recommendation to deal.

    Is your portfolio working for you?

    Our Financial Professionals can help you understand your investments, highlighting their performance and risk and giving you invaluable insight going forward.

    See more

    More insights

    Is your portfolio constructed like the England team?
    By Rob Morgan
    Spokesperson & Chief Analyst
    12 Jun 2024 | 6 min read
    Ways to build a low cost investment portfolio
    By Rob Morgan
    Spokesperson & Chief Analyst
    27 May 2024 | 8 min read
    Five tips for investing in gold, silver & other commodities
    By Rob Morgan
    Spokesperson & Chief Analyst
    23 May 2024 | 7 min read
    Investing in Japan: what’s the market outlook?
    By Rob Morgan
    Spokesperson & Chief Analyst
    23 May 2024 | 11 min read