Frugal billionaire Warren Buffett drives 2014 car and seeks hail-damaged deals

Warren Buffett’s choice of vehicle has become a topic of interest for 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 enormous 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 distinct aversion to the rapid depreciation experienced by new vehicles. Instead, he opts for used cars that offer deep discounts due to 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 a year, so his car really doesn’t need to be replaced 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 he replaces it with his current 2014 Cadillac XTS.

At a Berkshire Hathaway meeting years ago, Buffett explained the reason for his car choice, saying, “I actually chose the car I have based on the fact that it had airbags on both sides, so it was a factor and possibly the first such car ever made with airbags.”

Safety, in addition to affordability, plays a crucial role in its decision-making process. Buffett acknowledged that there might be safer options available, such as heavy-duty trucks, but explained that 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 fondness for his cars in a BBC documentary, saying: “You have to understand, he keeps cars until I tell him, ‘It becomes embarrassing – it’s time for a new car.'” She also revealed that he sent her to buy his most recent car, the now-discontinued 2014 Cadillac XTS.

With characteristic candor, Buffett said, “I have everything I want in life; it’s a very simple thing. If there’s something money could buy that I wanted, I would do it. this afternoon without hesitation.”

His view challenges the conventional notion that a higher standard of living is directly linked to increased spending and the accumulation of material wealth. While acknowledging the importance of essential goods such as good housing, health and transport, he believes that beyond a certain point there is an inverse correlation between the standard of living and the cost of life.

Even as one of the wealthiest people on the planet, Buffett remains grounded and in touch with the realities of daily life. Buying a car takes time. And he just doesn’t want to waste his time.

“If it took me probably half a day to do the exercise of buying a car and reading the owner’s manual and all that, and it’s only half a day, I don’t want to give up my life without any benefit,” Buffett said.

Buffett’s frugality in investing

Buffett’s frugality doesn’t just stop at his personal life. The legendary investor is known for his incredible ability to recognize a good move when he sees it. “The Buffett Indicator” is the measure of US GDP relative to the total value of US stocks and a key indicator the billionaire uses when analyzing the overall market.

Currently, the indicator is at 176%. 120% is considered “fair value”, with 223% being the highest in recent history in 2021. As the name suggests, this is only an “indicator”, so it is not not decisive, but it does imply that US equities are still overstretched, so investors might be better off looking for individual stocks that are underperforming relative to the overall market but poised for a rebound. There are also a number of alternative investments in today’s markets, such as the rapidly growing start-up investment markets. For example, startups like Loop Family have already raised over $100,000 from retail investors and are backed by top venture capitalists.

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