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Warren Buffett’s Income Compared to the Average American’s

stride-warren-buffett-income-compared-to-the-american-average-household-socialAs of March 2015, Warren Buffett is sitting pretty in third place on the Forbes World Billionaires list (with a net worth of just under US $73 billion). He built his fortune using a simple yet powerful investment strategy. Value investing.

In short, his strategy can be described as buying strong companies trading well below their intrinsic value and holding on to those positions over a long period.

In 2013, Buffett raked up an impressive US $13.5 billion, which means he earned an average income of US $37 million per day. To put that into perspective, Leonardo DiCaprio who received an Oscar nomination for his role in the highly popular film, “The Wolf of Wall Street”, earned US $39 million for the entire 2014. 

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It is difficult to grasp the wealth of the chairman and CEO of Berkshire Hathaway. To try fathom it, we can compare the average American household's income of 2013 with Warren Buffett’s salary of the same year.

Warren Buffet's incomeCourtesy of Penny Stocks Lab

The U.S. Census Bureau reported in September 2014 that the U.S. real (inflation adjusted) median household income was $51,939 in 2013.

How long will it take him to earn the average annual income of an American household? Brace yourself, the results are staggering.

Buffett's income vs average americanCourtesy of Penny Stocks Lab

No, you don't need an eye test.

It took Warren Buffett a mere two minutes to earn the average annual income of an American household

He earned US $13.5 billion in a year, which totals to US $37 million per day, just over US $1.5 million per hour and slightly above US $25,600 per minute.

It is jaw-dropping to say the least. If it takes Buffet two minutes to earn the average annual income, how long will it take the average American household to earn his income?

acCourtesy of Penny Stocks Lab

It will take the average American household a tremendous 259,920 years to earn Warren Buffett's income of 2013. 

Things you can buy with Buffett's 2013 salary

  • Best Buy, Barnes & Noble and The Cheesecake Factory combined.
  • 3,000 Lamborghini Veneno Roadsters at a starting price of $4.5 million.
  • And for the sports fans - Manchester United, Real Madrid, New York Yankees, Dallas Cowboys, Washington Redskins, and the Los Angeles Dodgers combined.

When Warren Buffett spends US $700,000 it is roughly the equivalent of an average earning household buying a bagel. That surely rubs salt in the wound. What would you buy if you earned Buffett's annual salary?

Does Warren Buffett have super powers?

Although his earning might suggest so, Buffett is purely human and possesses absolutely no super powers. It seems impossible for any human being to earn such an exorbitant amount of money, but  Buffett proves us wrong.

Interestingly, he made the majority of his fortune only after his 50th birthday. This goes to show that if you have the correct temperament, enough insight into business, abide by the principles of your long-term investing approach and ignore trends, fashion and market fluctuation you can achieve great results. Buffett is one in a billion and you might not achieve his extreme level of success but you can surely try.

Conclusion

The biggest advantage any investor can have is time. It is the most valuable asset, because of the law of compounding. Compound interest is the 8th wonder of the world and ensures better returns in the long run, if you invest properly. Buffett began investing at the age of 11 and look where he is today - sitting on a mountain of money. Never postpone investing. You don't have to be Einstein to invest fruitfullyTake advantage of the time you have and start investing as soon as possible. 

The calculator we used to make these calculations is a nifty tool designed by Penny Stocks Lab

Not all of us earn the exact same amount as the average American household. Have a go at the calculator to see how long it will take Buffett to earn your annual salary. I advise you to take a seat before doing so. Feel free to share your results in the comment section below. If you want some more value investing advice from one of the greats, read our 20 top Benjamin Graham quotes here.

Want to become a successful independent investor? Learn how to start, build and run your investment portfolio by signing up for our free demo of STRIDE's stock screening and picking investment software. 

STRIDE's practical guide to value investing for beginners: starting your portfolio

Topics: Portfolio Management, Buffettology

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