0k to 64 million in 29 Years (Ted Weschlers Roth IRA Retirement Account)

Get $20NZD when you deposit $100NZD with Hatch:

Hey it’s tom here and welcome back to the channel so over the weekend i came across a pretty mind-blowing story and that story is about how one individual investor turned a 70 000 retirement account into an account that had a balance in 2018 of 264 million dollars and uh this is an individual retirement account over in the us it’s an account that you can only

Contribute up to about six thousand dollars per year into in terms of your cash contributions so they’ve just had absolutely mind-blown returns over close to a 30-year period uh and the investor in question is actually someone that you may be familiar with his name is ted wesler he is 50 of the ted and todd duo at berkshire hathaway and is actually one of the

Investors that works under warren buffett so pretty crazy story i want to share some of the details in this video and i hope that you do enjoy it but before we get into that we do have a sponsor for this video and today’s sponsor is hatch now hatch have been my personal broker of choice for me as a kiwi buying shares in large u.s companies for more than a couple of

Years at this point uh they’ve also been a long time sponsor of the channel and i’m a huge fan of their platform as you can probably tell hedge have continued to improve the platform right throughout the two years or so i’ve been a customer and one of the more recent additions is kids accounts so if you want to get an investment account set up for your kids and get

Compounding working on their side really really early start them out invest in young and get them building the snowball you can now set up those accounts and hatch with even lower fees than you can in the traditional brokerage account so you can do trades in those hatch kids accounts for as little as 50 u.s cents per trade which really allows you to invest smaller

Amounts of money without having a lot of that capital chewed up in fees so if you’re interested in checking out hatch you’ll need to go to the link hatch dot a s forward slash investing on tom if you sign up through that link deposit 100 new zealand dollars into your new hatch account hatch will also give you a 20 top up so that you can get started investing with

A little bit more money so ted wesler’s retirement account absolutely mind blowing story i actually came across this just over the weekend as i was listening to the after dinner investor podcast uh if you aren’t already listening to that definitely go check it out highly recommend um and it’s really interesting to see some of the stats that pro publica have been

Releasing so there was quite a lot of information that propublica had actually picked up and have sort of been uh drip feeding us more and more interesting information about the finances of of some people based over in the us so the most recent story was around some of these iras individual retirement accounts there are a couple of pretty big names in that list

Uh ted westler obviously is the topic for this video uh but we also actually had peter thiel who you will probably know as the co-founder of paypal and an earlier investor in facebook amongst other things uh peter thiel actually turned his 2 000 ira into more than five billion dollars now he actually did that by using stock deals and some other things that aren’t

See also  MOCK CALL PRACTICE: Bank Customer Service | Interactive Session 4

Available to the general public so as ridiculously impressive as that is uh in this video i want to focus on ted wesler now like i say ted wesler is uh 50 of the ted and told duo at birch hathaway working under warren buffett uh and ted wesler actually has a pretty interesting story of how he got the job at berkshire hathaway so uh warren buffett is famous for

Having these annual charity auction lunches so you can literally bid to have lunch with warren buffett and take a handful of your friends along with you uh some of the famous winners in the past of course mean people like guy spear and monash babri as well ted wesler actually won this auction two years running so in 2010 he paid 2 million thousand 626 hundred

And eleven dollars to have lunch with warren buffett uh and then the following year in 2011 he paid two million six hundred and twenty six thousand four hundred and eleven dollars so he upped his bid by a hundred dollars from 2010 to 2011 uh and then he actually started working at burch hathaway the following year in 2012. so those lunches with warren buffett

Clearly went very well and he was then able to uh join birch hathaway and join up with todd combs who is actually already working at berkshire in 2012. and if we fast forward through to some of the latest information that we have on uh ted westler’s role at berkshire hathaway uh his portfolio currently consists of about 13 billion dollars of the just straight up

Equity portfolio that he can invest into whichever public security he likes and he also has an additional eight billion dollars which he manages as like a part of a pension fund program at berkshire and previous to his work at birch hathaway ted wesler actually also ran his own fund so he ran a fund from 2000 to 2011. if you had invested in the fund right at the

Beginning in 2000 uh one dollar invested in that fund would have turned into about 12 or 13 so massive compounded rate of return over that 11-year period by my maths and i’ll put up a screenshot here that comes out at about 26 per year uh and let’s not forget that so towards the back end of that period you also had the global financial crisis so um to go through the

Big drop that uh ted wesler presumably would have had in 2008 2009 and still come out with a you know full length track record of 26 per year compounded is extremely impressive but unfortunately for ted wesler’s investors it is not nearly as impressive as his ira and unfortunately we don’t have a lot of insight as to the types of investments that ted whistler

Was making through his retirement account he did release a statement which i’ll read a little excerpt from shortly which gives you a feel for sort of how he was investing in that particular account but i also just wanted to do some of the maths on how massive a rate of return ted whistler must have been cranking out in order to take a retirement account from

Seventy thousand dollars through to 264 million dollars because with these retirement accounts in the u.s which was originally an ira was converted to a roth ira which i’ll talk about shortly as well um you can’t put unlimited amounts of money into these tax advantage accounts so currently as it stands you can put about six thousand dollars per year into one of

These accounts presumably that amount has changed over time but that’s kind of where it sits today um so for this example i’ve just assumed that ted whistler would have maxed out that account every single year so for the last 29 years that we have data for let’s just assume he put in the full six thousand dollars per year now in order to go from seventy thousand

See also  The Social Realtor Mortgage Calculator Walkthrough and Quick Tips

Dollars uh in the 80s through to 264 million dollars in 2018 that would mean that he would have had to compounded money at 32 per year now warren buffett is the greatest investor of all time and is compounded at about 20 per year um granted that’s a longer track record than ted wesler but this is still very near a 30-year track record of over 30 per year now

I’ll put a really cool chart that i saw on twitter the other day up on the screen here which will show you sort of a comparison of outperformance over the market relative to the length of time that different super investors have been doing this for um and i’ll maybe try and edit it to put ted wesler on this chart just just to show how impressive these returns

Have been and how much he has truly outperformed the market so next up i just want to read a short extract from a statement from ted wesler so he was given a heads up that this report was going to come out uh and i will leave the link down in the description to the full statement from ted it’s about a one pager or so but this is the section that i certainly

Found most interesting so uh the statement says the investing success of this account has been a function of careful stock selection exceptional luck and a multi-decade time period to have a sum of this magnitude built up in my roth ira is certainly beyond anything that i ever expected but it was implemented in a way that was available to all taxpayers with an

Appropriately long runway i.e the result is exceptional but it’s not the product of exclusionary tech strategies so unlike peter thiel who i talked about earlier was using his ira for stock deals and all this sort of stuff um ted whistler compounded at north of 30 in a way that was fully accessible to any public investor so he was only buying public securities

He wasn’t doing these weird um you know off market stock deals or anything crazy like that he was simply carefully selecting stocks and sure luck as he says has played a factor over time but really it’s a result of careful stock selection year after year after year after year and having a really long runway to grow this nest egg and the statement from ted wesler

Does also go on to talk about tax of course an ira and a roth ira are both tax advantage accounts that are available in the us so my understanding is that with an ira you can put money in tax free you can compound it tax free and then when you want to pull that money out you get text sort of on the way out so you get text on the gains at that point a roth ira

On the other hand you get text on the way in you can then compound tax free and you can also pull the money out tax free that’s my understanding of the difference between an ira and a roth ira we obviously don’t have those accounts uh with me being here in new zealand so if i’ve got that slightly wrong i apologize please let me know down in the comments but that

See also  Why Crypto should not be allowed in retirement accounts | The Dough how

Is my understanding um and ted whistler talks about you know is this appropriate tax policy and um you know he makes the point that all of these investments were available publicly that’s not him necessarily saying that he worth a great sum of money should be allowed to do this and maybe there should be some absolute dollar thresholds put in place but he also

Talks about the fact that at a time where the government was really struggling for money they actually put out a two-year window to where you could convert an ira which he’d wish they had initially started into a roth ira and you could pay sort of a tax hit as a one-off consequence of doing that but then you could continue to compound tax free and pull the money

Out at the intex free and ted wesler did actually choose to do that and in a year where he expected to pay less than a million dollars in income tax he paid actually over 20 million dollars in tax because of that ira conversion so sure there are millions and millions of dollars in that particular account that are going to continue to be tax-free forever and ted

Wisler has more money than he’s probably ever going to need but still the government were able to benefit quite handsomely uh from that conversion that ted whistler went through from an ira to a roth ira when they were really struggling for cash now although this is a amazingly cool story that i would love to get more details on in terms of how ted whistler has

Compounded at such a high rate there are a couple of really key takeaways for me and one of the main ones that i’ve mentioned in previous videos is actually to do with the berkshire hathaway 13f so today as i said earlier ted wesler is investing some of berkshire hathaway’s equity portfolio uh and this has really prompted me to pay a lot more attention to some of

The smaller stuff in the berkshire 13f so in the past i’ve really been guilty of only paying attention to the big positions in bookshathway’s 13f only really paying attention to what warren buffett might be doing and you know what’s happening in the top five or ten names but after reading this i really want to pay more attention to some of the smaller investments

In the portfolio if something’s changing in the top five or ten positions it’s unlikely to be ted or todd but if something’s changing down the bottom and there are some new investments that come into the portfolio i’m going to use this as some motivation to look a little bit harder than i have done in the past at some of those smaller investments so that’s it

For me for this one i do hope you enjoyed the video and me sharing that story of ted wesler’s incredibly impressive ira account i will leave a couple of links down in the description so if you want to check out the statement from ted wesler that will be down in the description as well as one of the original pro public reports if you’re interested in checking out

The hatch offer you’ll need to go to the link hatch dot aes sports investing on tom which will also be linked down in the description below but that’s it for me for this one i do hope you enjoyed it and i will see you in the next video cheers

Transcribed from video
$70k to $264 million in 29 Years (Ted Weschler's Roth IRA Retirement Account) By Investing with Tom