Power Players

How Warren Buffett spends his billions

Warren Buffett
Gerry Miller | CNBC

Unlike some other mega-billionaires, Warren Buffett's net worth has taken a bit of a hit in 2020, thanks to a volatile stock market and an economy suffering the effects of the coronavirus pandemic.

Berkshire Hathaway, the investment vehicle for the "Oracle of Omaha," has seen its stock dip by roughly 8% since the start of the year, shaving several billion dollars off of Buffett's net worth. Buffett's fortune also shrank in July, when he donated another $2.9 billion to charity as part of his ongoing pledge to give away the bulk of his billions.

As a result, the investing icon has shuffled spots on the Bloomberg Billionaires Index ranking, dropping from fourth-place earlier this year to as low as eighth on the list in July. Bloomberg currently has Buffett ranked seventh in the world, while estimating that the investor's fortune has shrunk by about $11 billion since the start of 2020.

According to research firm Wealth-X, the 89-year-old Buffett boasts an estimated net worth of at least $84 billion. That's based on estimates of the value of Buffett's assets as of Aug. 13 that Wealth-X provided to CNBC Make It. (On Wednesday, Bloomberg listed Buffett's fortune at approximately $79 billion.)

Despite being one of the world's wealthiest people, Buffett is also notoriously frugal, eschewing mega-mansions, yachts and super cars. For instance, despite his billions of dollars, Buffett says he eats at McDonald's for breakfast every day (and spends no more than $3.17 each time) and for years he used a $20 flip phone until finally upgrading to an iPhone 11 in February (Berkshire owns roughly 5.9% of Apple).

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So, how does one of the world's most famous billionaires spend his fortune?

Real estate

Buffett has said that he's "never had any great desire to have multiple houses and all kinds of things and multiple cars." So it's no surprise that he still lives in the 6,570-square-foot stucco home he bought for just $31,500 in Omaha, Nebraska in 1958. (The sale price of the home would be equivalent to about $285,000 today.)

Buffett has even been working from home there during the pandemic. 

Wealth-X estimates the value of the five-bedroom, 2.5-bathroom Omaha home at $1 million. In a 2010 letter to Berkshire Hathaway's shareholders, Buffett called his home "the third best investment I ever made," after two wedding rings (he's been married twice).

Buffett did previously own a second home, though. In 1971, the billionaire bought a beachfront estate in Laguna Beach, California, for $150,000 (or, roughly $976,500 in today's dollars) and he sold that property in 2018 for $7.5 million. The 3,600-square-foot Emerald Bay house featured six bedrooms, seven bathrooms and multiple balconies with views of the Pacific Ocean.

Transportation

In 2014, the billionaire bought a new Cadillac XTS, a luxury sedan with a starting price around $46,000. In fact, Buffett upgraded from a 2006 Cadillac DTS after his daughter, Susie, convinced him it was "embarrassing" to be driving an older car. (A year later, he actually auctioned off the older Cadillac to an anonymous bidder, who paid $122,500 that went to the charity Girls Inc of Omaha.)

Buffett's preference for Cadillacs likely stems from the fact that Berkshire Hathaway owns a 5.2% stake in the car brand's parent company, General Motors.

Cars aside, Buffett once said that one of his only luxuries was a private jet, because it saved him so much travel time. In 2012, Buffett called his jet "the only thing that I do that costs a lot of money." More than two decades ago, Buffett bought a Bombardier Challenger 600, a luxury jet that can cost around $32 million, which he later named "The Indispensable."

Then, in 1998, Buffett's Berkshire Hathaway bought private business jet charter company NetJets, which allows clients to buy shares of private jets for shared usage. Buffett is also a NetJets client, and Wealth-X counts among his assets a "fractional ownership" of a Cessna Citation XLS business jet. The research firm values Buffett's stake in that jet at $700,000. (A new Cessna Citation XLS can cost $13 million overall.)

Philanthropy

As one of the creators of The Giving Pledge, along with Bill and Melinda Gates, Buffett has become a poster child for billionaire philanthropy. Launched in 2010, the pledge now has signatures from more than 200 wealthy individuals, including billionaires Elon Musk, Mark Zuckerberg and MacKenzie Scott (Jeff Bezos' ex-wife). Like Buffett, those signatories have pledged to donate the majority of their wealth to charity during their lifetimes.

Warren Buffett, Bill and Melinda Gates, in an interview on May 5, 2015
CNBC

Since 2006, Buffett has donated more than $37 billion, in total, from his fortune, making annual gifts in the billions of dollars to various charities and philanthropic groups. In July, Buffett's latest gift of $2.9 billion (which was 15.9 million class B shares of Berkshire Hathaway) was split among the Bill & Melinda Gates Foundation and four Buffett family charities (one of which was started by his late wife, Susan, with the other three run by each of his three children).

All the rest

Nearly 99% of Buffett's fortune stems from his holdings in Berkshire Hathaway, with Wealth-X estimating that stake to be valued at $82.8 billion as of Aug. 13.

And while Berkshire holds shares in a wide variety of companies, Buffett also has his own personal stock holdings.

For instance, Wealth-X estimates that Buffett owns about $30 million of stock in the U.S. Bancorp, another $19.5 million of stock in the real estate investment trust Seritage Growth Properties, and a $45 million stake in Wells Fargo as of Aug. 13. (Buffett's Berkshire Hathaway did recently disclose that it sold off about 85 million shares of Wells Fargo stock, roughly a quarter of its position in the banking giant, but Berkshire's remaining stake is still valued at more than $6 billion.)

Additionally, Wealth-X estimates that Buffett has about $1 billion in holdings that the research firm attributes to "proceeds from previous salaries, bonuses, investments, dividends, and stock transactions." For nearly three decades, Buffett has taken the same annual salary — $100,000 — for his role as chairman and CEO of Berkshire Hathaway, as the bulk of his wealth comes from his ownership stake in the company.

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