How a simple habit turned $70,000 into $269 million for Warren Buffett’s stepson

In a remarkable story of investing success spanning three decades, Ted Weschler – now one of Warren Buffett’s top lieutenants at Berkshire Hathaway – turned a modest retirement account into a fortune worth hundreds of millions.

His journey offers valuable insights into the power of sustained investing, compound growth, and strategic thinking.

How ProPublica learned about Weschler’s account

Weschler’s extraordinary retirement account growth was revealed by ProPublica’s investigative reporting in June 2021. Through their analysis of federal tax returns, they discovered the astronomical growth of their individual retirement account (IRA).

The investigation was part of a “Secret IRS Files” series that looked into how the wealthiest Americans exploit the tax code. Using a trove of IRS data, ProPublica identified cases in which retirement accounts — designed to help average working families — have been converted into tax-advantaged mega-wealth vehicles.

While the ProPublica exposé sparked public debate about tax policy, Weschler himself expressed mixed feelings about the propaganda. He said he would have preferred to keep the information private, but decided to use the revelation as an opportunity to educate others about the importance of planning for early retirement.

How Ted Weschler grew his account

Weschler opened his first retirement account in 1984 when he was a 22-year-old junior financial analyst earning a modest salary of $22,000. Through a combination of maximizing his contributions and taking full advantage of employer matching, he was able to grow the account to about $70,000 by 1989.

He later transferred his retirement savings into a self-directed IRA, giving him complete control over his investment decisions. Weschler persevered despite a major setback in 1990, when his account lost 52% of its value, and viewed the losses not as failures but as “unconvertible lessons.”

His investment philosophy focused on deep research and focused positions in what he considered to be undervalued stocks. In 2000, Weschler launched a hedge fund and began focusing on a small number of companies, which often held positions for long periods. He has applied this approach to his own investments, focusing on understanding business fundamentals, competitive advantages, and quality of management to identify undervalued companies. This patient approach helped him achieve a remarkable 22% annual return after fees from 2000 to 2011.

In 2012, he made the strategic decision to convert his traditional IRA to a Roth IRA — paying $28 million in taxes in the process — but effectively shielding his gains from future taxes. This move showed long-term thinking and was tax efficient.

The $5 million lunch and subsequent job offer

Weschler met Warren Buffett through an unusual chance. He paid a total of $5 million at charity auctions to have lunch with Buffett in 2010 and again in 2011. These two meetings impressed Buffett so much that he hired Weschler at Berkshire Hathaway in 2012 as chief investment officer.

Since then, Weschler has focused on identifying large-cap companies that meet Berkshire’s strict investment criteria.

Lessons from Weschler for young investors

In advising young investors, Weschler emphasizes simplicity and consistency. He points out that even if his original retirement account had simply been invested in an S&P 500 index fund, it would have grown to nearly $1.6 million by 2021.

His key recommendations for retirement savers include:

• Start early
• Maximize employer matches (if applicable)
• Conduct careful research and due diligence
• Invest 100% in stocks
• Avoid distractions from market noise

He focuses specifically on index funds for investors who lack the time or inclination to study individual investments in depth.

Bottom line

Weschler’s extraordinary success demonstrates the power of smart, long-term value investing combined with disciplined decision-making. While his results may be difficult to replicate, his basic principles of starting early, investing consistently, and learning from setbacks provide a valuable roadmap for anyone looking to build long-term wealth through retirement accounts.