Valuable life and investing lessons from Charlie Munger

Charlie Munger, Warren Buffet’s longtime friend and business partner, passed away earlier at age 99.  He is a man of wisdom and I wish I had learnt to fully appreciate his values and principles much earlier as that would have helped me avoid some costly investment mistakes.

One of the principles that help guide me is: Don’t sell anything you wouldn’t buy yourself – examples like ILAS, low-guaranteed savings insurance and crypto-related instruments.  Munger, a major critic of bitcoin and cryptocurrencies, call them rat poison in general.  Having learnt the pros and cons of those products, I would never buy these products if I were a customer on the receiving end.

Another valuable advice: The easiest way to avoid mistakes is to avoid anything you really don’t understand.  All of the products above fall into this category as they are all very complex, not transparent and come with high fees/costs.  There are always people trying to sell you the next HUGE things, and they usually seem complex and are too new to be regulated(think crypto and JPEX).  And nobody has been put in jail yet despite people losing millions of dollars in the JPEX incident.

Munger suggests to limit to a circle of competence when it comes to investing. Unless you are equipped with world-class research support, it is best to invest in a diversified portfolio of low-cost funds than try to your luck with stock-picking.

Munger said the big money is not in the buying or the selling, but in the waiting.  His business partner Buffet accumulates the majority of his wealth after age 65.  Save diligently and stay invested with a solid foundation and a little patient goes a long way for compounding to work its magic.

Munger is also a lifelong learner and always keeps an open mind and is prepared to admit mistake and change his mind when the time is right.  Thank you Charlie for your timeless and selflessness lessons and rest in peace.

Last Update: 22 February 2024