Lessons from Warren Buffett, Rising Homeownership Costs, and the U.S. Retirement Crisis
On this episode of Upticks, Jake and I look into lessons from young Warren Buffett’s early investments, discuss the rising costs of homeownership due to insurance and taxes, and explore the U.S. retirement crisis with insights on how to save $4.5 million. We finish up with opinionated debate on guilt-free spending and ‘tightwads’.
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Read a summary of the conversation below:
What You Can Learn from Young Warren Buffett
Jake and Cory begin by looking into the fascinating world of Warren Buffett’s early investments. They discussed a book titled “Buffett’s Early Investments” by Brett Gardner, which meticulously analyzes Buffett’s first millions made in undervalued companies during the 1950s and 60s. The book emphasizes the importance of thorough research and patience, highlighting how Buffett’s strategies were highly effective in his time but may be more challenging to replicate today due to increased market efficiency.
Jake and Cory debated whether savvy investors should try to replicate Buffett’s strategy with a portion of their portfolio. Jake pointed out the potential for high returns if one invests in undervalued companies that eventually shoot up. However, Cory cautioned that the market is more efficient today, making it harder to find such undervalued stocks. They both agreed that while it could be a valuable learning experience, it should only be done with money one can afford to lose.
The discussion also touched on the challenges of conducting research without the internet, as Buffett did in the 1950s and 60s. Jake humorously noted that some now leans on AI tools like co-pilot for research, which would have been unimaginable in Buffett’s early days.
Insurance and Taxes Now Cost More Than Mortgages for Many Homeowners
In another segment, Jake and Cory discussed a recent Wall Street Journal article highlighting the rising costs of homeowners insurance and property taxes, which now exceed mortgage payments for many homeowners. This trend is straining budgets across the country, with significant increases in insurance rates due to natural disasters and rising repair costs in an inflationary environment. Additionally, surging home values have led to higher property taxes.
Cory pointed out that in September 2024, 32% of the average single-family mortgage payment went to taxes and insurance, the highest rate ever recorded since the data collection began in 2014. This statistic underscores the increasing financial burden on homeowners and challenges the notion that renting is simply throwing money away.
Jake and Cory explored the pros and cons of these rising costs. On the positive side, higher costs bring awareness to the true cost of homeownership, encouraging people to think beyond just the mortgage payment when evaluating whether to buy or rent. Additionally, rising property taxes often reflect increased property values, providing homeowners with more equity and potential profits if they sell.
However, the cons can be significant. Older Americans on fixed incomes may struggle to afford these hikes, as their social security or pension payments may not increase at the same rate. Furthermore, higher prices intensify the lack of affordability for first-time homebuyers, making it harder for them to enter the housing market.
Source: Wall Street Journal | As of: 1/1/2025
‘It’s 100% True.’ Acorns CEO on the U.S. Retirement Crisis—and How to Save $4.5 Million
The final segment of the episode discussed an article and an interview with Noah Kerner, CEO of Acorns, who discussed the U.S. retirement crisis and how to save $4.5 million. Acorns is an app that rounds up your purchases to the nearest dollar and invests the spare change, making it more convenient for people to save and invest.
In the article, Kerner emphasized that many Americans are unprepared for retirement due to inadequate savings and a lack of financial literacy. He criticized financial services companies for failing to provide accessible and effective tools for saving and investment, highlighting Acorns as a solution that helps simplify investing and encourages good habits.
Jake and Cory discussed the pros and cons of using apps like Acorns. On the positive side, such apps increase awareness of the importance of saving and investing, making it easier for people to start building their retirement funds. They also emphasize financial literacy, helping individuals make informed decisions about their retirement.
However, Cory pointed out that relying on technology might not be suitable for everyone, especially those who are not tech-savvy. Additionally, users need to be aware of potential fees associated with these services, which can impact their overall savings.
Jake shared his personal approach to financial planning, emphasizing the importance of having a solid financial plan that dictates how much to save each year. He argued that once you have a plan in place, you can spend guilt-free, knowing that your financial goals are on track. Cory echoed this sentiment, sharing his own experience of learning and adjusting his financial habits over the years.
Thank you for tuning in, we hope you have a great week!
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