Jeannine Mancini
·4 min read
Warren Buffett's choice of vehicle has become a topic of interest among many people. Renowned for his frugal and simple lifestyle, the billionaire investor drives a 2014 Cadillac XTS. While some billionaires indulge in extravagant cars as a visible symbol of wealth and success, Buffett's preference for older models reflects his unique approach to life and finances.
Buffett's frugality and minimalist mindset have been key factors in his tremendous success as an investor. His ability to seek value in all aspects of life, not just business and investments, has shaped his distinctive financial philosophy. When it comes to cars, Buffett has a clear aversion to the rapid depreciation experienced by new vehicles. Instead, he opts for used cars that offer significant discounts because of cosmetic issues like hail damage.
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In a 2014 interview with Forbes, he revealed that he only drives about 3,500 miles per year, so there's really no need to replace his car often. After driving his 2001 Lincoln Town Car for a decade, Buffett auctioned it off for charity and replaced it with a 2006 Cadillac DTS. He drove that car for eight years, until replacing it with his current 2014 Cadillac XTS.
At a Berkshire Hathaway meeting years ago, Buffett explained his rationale for his car choice, stating, "Actually, I picked out the car I have based on the fact that it had airbags on both sides. So that was a factor and maybe the first car of its type ever made with airbags."
Safety, in addition to affordability, plays a crucial role in his decision-making process. Buffett acknowledged there might be safer options available, such as heavy-duty trucks, but explained he personally preferred his current vehicle at the time.
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His daughter Susie Buffett humorously shared an anecdote about her father's attachment to his cars in a BBC documentary, stating, "You've got to understand, he keeps cars until I tell him, 'This is getting embarrassing — time for a new car.’” She also revealed he sent her to purchase his most recent car, the now-discontinued 2014 Cadillac XTS.
With his characteristic straightforwardness, Buffett expressed, "I have everything in life I want; it's a very simple thing. If there's anything that money could buy that I wanted, I would do it this afternoon without hesitation."
His viewpoint challenges the conventional notion that a higher standard of living is directly tied to increased spending and accumulation of material wealth. While acknowledging the importance of essentials such as good housing, healthcare and transportation, he believes that beyond a certain point, there is an inverse correlation between standard of living and cost of living.
Even as one of the richest people on the planet, Buffett remains grounded and in touch with the realities of everyday life. Car shopping is time-consuming. And he just doesn't want to waste his time.
"If it would take me probably a half a day to go through the exercise of buying a car and reading the owner's manual and all that, and that's just a half a day I don't want to give up in my life for no benefit," Buffett said.
Buffett's Frugality in Investing
Buffett's frugality doesn't just stop athis personal life. The legendary investor is known for his incredible ability to know a good stock when he sees it. The "Buffett Indicator" is the measure of U.S. GDP compared to the total value ofU.S. stocks and a key indicator the billionaire uses when analyzing the overall market.
Currently, the indicator is sitting at a whopping 176%. 120% is considered 'fair value,'with 223% being the highest in recent history during 2021. As the name suggests, this is merely an 'indicator' so it's not determinative, but it does imply U.S. stocks are still overextended so investors might fare best looking for individual stocks underperforming the overall market but primed for a rebound. There are also a number of alternative investments in today's markets, such as the quickly growing startup investing markets. For example, platforms like StartEngine allow anyone to invest in high-growth startups.
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