has partnered with CardRatings for our coverage of selected credit card products. and CardRatings may receive a commission from card issuers. All opinions expressed are the author’s alone, and the content has not been provided nor approved by any of the companies mentioned. Thank you for supporting this independent site.

Charlie Munger: Financially Independent at Age 38 in 1962

Despite the fresh packaging, we should remember that the “FIRE” concept (Financially Independent, Retire Early) is anything but a new concept. Even I can’t help being a little intrigued by the clickbait title “This Secret Trick Let This Couple Retire at 38”. Such an article could have been written about the 95-year-old Charlie Munger before he started investing alongside Warren Buffett:

The first 13 years I practiced law, my income [from practicing law] was $300,000 total. At the end of that 13 years, what did I have? A house. Two cars. And $300,000 of liquid assets. Everyone else’d have spent that slender income, not invested it shrewdly, and so forth.

I just think it was, to me, it was as natural as breathing, and of course I knew how compound interest worked! I knew when I saved $10 I was really saving $100 or $1,000 [because of the future growth of the $10], and it just took a little wait. And when I quit law practice it was because I wanted to work for myself instead of my clients, because I knew I could do better than they did.

Net worth analysis. According to his Wikipedia bio, the 95-year-old Munger graduated from law school in 1948. Let’s say he practiced law from 1949 to 1962. At the end of those 13 years, he states that he had $300,000 in liquid assets, a house, and two cars. The median value for a Los Angeles area house in 1962 was about $15,000. The median cost of a new car in 1962 was about $3,000. Adding this all up means his net worth in 1962 was about $321,000.

That was a significant amount of money in 1962. According this CPI inflation calculator, that is the equivalent of $2.7 million in 2019 dollars. In other words, the Munger household was financially independent when he was 38 years old.

Income analysis. He also states that in those 13 years as a lawyer, he made $300,000 total. For the sake of simplicity, let’s just say he earned the same income every year. That works out to $23,000 per year. This was a relatively high income – $193,000 per year in 2019 dollars. According to this source, the median family income in 1962 was $6,000 per year. That means he was earning about four times the median average household income.

Super-saver, super-investor, or a little of both? Maybe he shared this somewhere else, but I don’t know his saving rate or his investment return. He does boast of both not spending all that “slender” income and also about investing it “shrewdly”. We have his annual income and his final ending net worth, so you can set one and figure out the other using a compound return formula. I’m assuming everything is after-tax for simplicity again.

  • Let’s say he was a super-saver with a 50% saving rate. That means he saved $11,500 every year and invested it for 13 years. That would work out to an 10.5% annual compounded rate of return.
  • Let’s say he was a super-investor with a 20% annual compounded rate of return. That would work out to an annual savings of $5,500 per year, or a 24% savings rate.

I found that the annualized return of the S&P 500 index from January 1949 to January 1962 was about 18% when you include dividends (source). Thus, my guess is that he was somewhere between these two markers: 50% savings rate/10.5% annual investment return and 24% savings rate/20% annual investment return. These stats are definitely admirable and impressive, but also show that he didn’t hit the lottery or anything crazy.

Munger’s example reaffirms that if you have a relatively high income, save a high percentage of that income, AND invest that money into productive assets, your net worth will grow quite quickly.

A criticism of financial independence seekers is that it is pitched to “everyone” but only works for the rich. It is absolutely true that it is the easiest for high-income earners. How could it be any other way? At the same time, there are many households that earn high incomes that spend 95%+ of it every year. If these folks realize they have financial independence within their grasp, and then change their behavior to achieve it, I still view that as a positive thing. It’s always hard to spend less than the people you hang around with.

In our case, we both eventually earned six-figures, but not the entire time. When we earned a combined $60,000 a year, we lived on $30,000. When we earned a combined $100,000, we lived on $50,000 per year. When we earned $200,000, we lived on under $100,000. Would we have been able to maintain the 50% savings rate on a $60,000 income for 15 years? I’ll never know. I know it would have been much more difficult, and I’m glad we didn’t have to try. I’m also glad we started when we were young and without kids.

Managing expenses (frugality) alone will not get you there, but I still believe it is an important factor once you get your income to a certain level. I would argue that a household earning $100,000 and spending $50,000 per year is much better off in the long run than a household earning $150,000 and spending $125,000 or even $100,000 per year. Now, if someone is making minimum wage, it will be hard to have a lot left over to invest. Your efforts would be best focused on the income side of the equation.

Bottom line. Charlie Munger was born in 1924 and reached financial independence at age 38 from his earnings as a lawyer (before he became partners with Warren Buffet). While he is now best known as a billionaire investor, he took a familiar path to financial independence: solid 9-5 income, consistently high saving rate, and prudent investment of the difference. The same formula he started using in 1949 remains available 70 years later to someone starting in 2019.

Blue Cash Preferred from American Express Review: 6% Cash Back on Groceries ($6,000/Year), Netflix, HBO Now, Spotify

New added features, bigger welcome offer. The Blue Cash Preferred® Card from American Express has been updated with a bigger welcome offer and new 6% and 3% cash back categories. Thankfully, their best feature remains: 6% cash back at US stand-alone supermarkets on up to $6,000 per year in purchases. If you spend $65 a week at supermarkets, that alone will earn you over $200 a year in rewards. Here are the updated highlights:

  • $250 statement credit after you spend $1,000 in purchases on your new Card within the first 3 months.
  • 6% Cash Back at U.S. supermarkets on up to $6,000 per year in purchases (then 1%).
  • 3% Cash Back at U.S. gas stations.
  • 6% Cash Back on select U.S. streaming subscriptions. (NEW)
  • 3% Cash Back on transit including taxis/rideshare, parking, tolls, trains, buses and more. (NEW)
  • 1% Cash Back on other purchases.
  • $95 annual fee.

Basically, AmEx is trying to be trendy and cover things like Netflix, HBO Now, Spotify, and Uber/Lyft. Note that they are removing removing the ability to earn 3% cash back at U.S. department stores benefit on 7/31/2019. This works out well for my spending patterns.

Max out your benefit by buying gift cards at US supermarkets. Every December, I use this card to buy gift cards at a standalone grocery to use up the annual limit and get 6% back. My local Safeway has an entire wall of options, but I usually go with Amazon, Apple iTunes, or Starbucks. You can easily track how much you’ve spent on groceries on your online account. Just go to “Statements & Activity” > Chart logo (Graph and Filter your Transactions), and then click on “Merchandise and Supplies”. Adjust dates as necessary. Screenshot:


Supermarkets details. “US stand-alone supermarkets” means that superstores, convenience stores and warehouse clubs are not considered supermarkets. This means no Super Wal-Mart, no Super Target, no Costco. Examples of merchants that count (and this is not a complete list!) are Safeway, Whole Foods, Meijer, Vons, Winn-Dixie, Gristedes, Shoprite, Stop and Shop, and online supermarkets such as FreshDirect.

Gasoline details. “US stand-alone gas stations” means that superstores, supermarkets, and warehouse clubs that sell gasoline are not considered gas stations. This means no Target, no Costco, no Sam’s Club. Examples of merchants that count (and this is not a complete list!) are Exxon, Mobil, Hess, Shell, Gulf, Murphy USA, Murphy Express.

US Streaming Subscriptions details. These are all included:

• Amazon Music
• Apple Music
• Audible
• CBS All Access
• Direct TV Now
• Fubo TV
• HBO Now
• Hulu
• iHeartRadio
• Kindle Unlimited
• NBA League Pass
• Netflix
• Pandora
• Prime Video Unlimited
• Showtime
• Sling TV
• SiriusXM Streaming and Satellite
• Spotify
• YouTube Music Premium
• YouTube Premium
• YouTube TV

Annual fee. There is a $95 annual fee, so you’ll want to utilize that 6% cash back on groceries to maximize your value. If you spend the max cap of $500 a month at supermarkets, at 6% back that would net you $360 cash back in a year vs. $60 at 1% cash back. Note that simply spending $31 per week at supermarkets at 6% cash back will result in over $95 Reward Dollars per year to cover the annual fee.

If you don’t like the idea of paying an annual fee, the Blue Cash Everyday Card from American Express offers 3% at U.S. supermarkets on up to $6,000 per year in purchases with no annual fee. It currently offers a $150 statement credit after you spend $1,000 in purchases on your new Card within the first 3 months. You can also learn more about this card and apply online at

Cash back is officially given in the form of Reward Dollars that can be redeemed as a statement credit, gift cards, and merchandise. I always just stick with statements credit to directly pay down my monthly bill.

Bottom line. The Blue Cash Preferred Card from American Express has the key feature of 6% cash back at US supermarkets (on up to $6,000 per year). You can now also get 6% cash back on Netflix/Spotify/HBO Now as well as 3% cash back at US gas stations and transit (Uber/Lyft/train). New cardmembers can get a $250 statement credit after $1,000 in purchases within 3 months.

This has been a “keeper” card for me for many years now. I treat it like one of my 5% cash back cards, except there are no rotating categories or activations to worry about. Supermarket purchases (and gift cards) go on this card all year long. Then in December, I use up the rest of the $6,000 annual spending limit on gift cards for holiday presents. With the new features, I’ll also add it as default payment for any streaming apps and Uber/Lyft.

The Best Time To Plant A Tree Is Now

Have you heard of the "happiness curve"? According to multiple studies of life satisfaction, I am entering the unhappiest period of my life at age 40 (WaPo): My theory is that this is simply the inverted curve of "number of humans that I am … [Read the rest]

Immediate Annuities vs. Safe Withdrawal Rates

Annuities have a rather mixed reputation, which I think is mostly deserved. Some are amazingly complex and expensive (the word "Indexed" can be bad in this world). Then there are simple, straightforward ones that are worth consideration, including … [Read the rest]

Charlie Munger 2019 Wall Street Journal Interview Transcript

The best thing I read today was definitely Charlie Munger, Unplugged, the full transcript of a 6-hour interview with Charlie Munger about his philosophies on business, investing and life, as conducted by Jason Zweig and Nicole Friedman of the Wall … [Read the rest]

Berkshire Hathaway Shareholder Meeting Full Videos, Transcripts, and Podcasts

Updated for 2019 Meeting. Berkshire Hathaway's Annual Shareholder Meetings are held in Omaha, Nebraska every May. Although most of my portfolio is in a diversified mix of index funds, I also own individual shares of Berkshire Hathaway and respect … [Read the rest]

Top 10 Best Credit Card Bonus Offers – May 2019

Updated May 2019. That space in your wallet or purse is more valuable than you think. Credit card companies are fighting it out, offering strong perks and $500+ value for a single card during the first year to encourage you to apply and try it out. … [Read the rest]

Improved 60,000 Point Southwest Credit Card Bonuses (Good For Companion Pass)

Multiple offer bumps to 60k. Southwest Airlines offers a unique feature called the Companion Pass, which lets you pick one person to fly with free when you book either paid or award flights. If you either fly 100 qualifying one-way flights or earn … [Read the rest]

Best Interest Rates on Cash – May 2019

Here's my monthly roundup of the best interest rates on cash for May 2019, roughly sorted from shortest to longest maturities. There hasn't been much movement recently, and the rate curve is still pretty flat with long-term rates only slightly … [Read the rest]

Savings I Bonds May 2019 Interest Rate: 1.40% Inflation + 0.50% Fixed Rate

Update 5/1/19. The fixed rate will be 0.50% for I bonds issued from May 1, 2019 through October 31st, 2019. This is the same as it was for the last 6 months. The variable inflation-indexed rate for this 6-month period will be 1.40% (as was … [Read the rest]

Vanguard ETFs Now Permanently Cheaper Than Admiral Shares (More Examples)

Updated with more examples. Up until recently, Vanguard has had a long history of keeping the expense ratios of their corresponding ETFs and Admiral Shares mutual funds the same. As of 2019, this is no longer the case. Inside a Vanguard notice, … [Read the rest]

Richard Feynman and Fighting Burnout With Curiosity

While going back through my Kindle highlights, I came across the autobiography of Richard P. Feynman, "Surely You're Joking, Mr. Feynman!": Adventures of a Curious Character. Feynman won the Nobel Prize in Physics in 1965 but was also something of … [Read the rest]