Warren Buffett Spent Only $100 Starting His First Investment Company – Its Christmas Closure Led To $981 Billion Berkshire Hathaway

Warren Buffett's financial empire may be a $981 billion powerhouse today, but its origins are surprisingly humble – like, really humble. Imagine one of the world's most famous investors kicking off his journey with just $100. That's exactly how Warren Buffett started in 1956 when he was a 25-year-old with big dreams and a knack for numbers.

The story begins with Buffett launching Buffett Associates, Ltd., his first investment partnership. Now, you might think he had a fortune to start with, but in reality, Buffett scraped together only $100 from his pocket. The real muscle came from his inner circle – family and friends who believed in his vision. They chipped in $105,000, putting their trust in this young upstart. His sister Doris, Aunt Alice and father-in-law were among the first to back him, marking the beginning of what would become one of the most remarkable financial stories of our time.

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What set Buffett apart from the start was his innovative approach to investing. He wasn't interested in taking a slice off the top just for managing money. Instead, he structured the partnership to earn a 50% share of profits exceeding a 6% annual return while taking on 25% of any losses. This move wasn't just smart – it was game-changing. It meant Buffett's interests were perfectly aligned with his investors: he would only make money if they did.

Following the principles of his mentor, Benjamin Graham, Buffett focused on undervalued companies that others overlooked. The strategy worked like a charm. Over the years, Buffett Partnership Ltd. achieved a jaw-dropping compounded annual return of 25.9%, turning heads in the investment world. By 1962, the partnership had ballooned to over $7 million in assets and Buffett himself crossed the million-dollar mark for the first time.

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That same year, Buffett began buying shares of Berkshire Hathaway, a struggling textile company, through the partnership. It wasn't exactly a gold mine – more like a rusting relic – but Buffett saw an opportunity. By 1965, he had fully controlled the company and transformed it into his investment vehicle.

As Berkshire grew, Buffett recognized the declining prospects of the textile business. He pivoted the company into other areas, starting with the 1967 acquisition of National Indemnity. This decision was pivotal – National Indemnity provided insurance "float," a steady stream of cash that Buffett used to fuel further investments.

By the late 1960s, Buffett grew disillusioned with Wall Street's speculative environment. Mergers, shady accounting practices and inflated valuations made finding quality investments increasingly difficult. In 1969, Buffett decided to shut down Buffett Partnership Ltd.

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During the Christmas season that year, Buffett worked tirelessly to finalize the dissolution of the partnership. According to Alice Schroeder's The Snowball: Warren Buffett and the Business of Life, he spent Christmas in Laguna Beach writing letters to his investors, answering their questions and ensuring the closure process went smoothly. On Dec. 26, Buffett sent a detailed letter addressing partner concerns after exchanging Christmas gifts.

This moment marked a critical turning point. With the partnership dissolved, Buffett redirected his attention to Berkshire Hathaway, which would become his primary investment vehicle moving forward.

What began with a $100 personal investment and $105,000 in family trust became the foundation for one of the world's largest and most successful conglomerates. It's a reminder that sometimes, it's not about where you start but where you're headed.

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