In 1984, Ted Weschler was a 22-year-old financial analyst, fresh out of college and earning $22,000 a year. Nothing then predestined the man who would become one of Warren Buffett’s right-hand men at Berkshire Hathaway to accumulate a colossal fortune in an Individual Retirement Account (IRA).
Yet, thirty-five years later, his retirement account showed a staggering balance of $264.4 million. A success story brought to light by a ProPublica investigation that has turned the perception of the American retirement savings system on its head.
A modest start, a relentless strategy
Ted Weschler’s story is that of an ordinary American who took advantage of investment mechanisms available to everyone.
When he started at W.R. Grace in 1984, he began contributing the maximum amount allowed to his retirement account, taking advantage of his employer’s matching contribution program.
By 1989, his account already stood at $70,385, a respectable sum, but still a long way from the fortune he was to build.
That same year, Weschler decided to transfer his funds to a Self-Directed IRA, an individual account that gave him the freedom to choose his investments.
From then on, he rigorously applied a strategy based on fundamental research, concentrated position-taking and a long-term investment horizon.
Even the crash of 1990, which plunged his portfolio by 52%, did not deter him from his course. He describes the loss as an “unmonetized lesson”, according to Business Insider, preferring to see it as a learning opportunity rather than a failure.
Outstanding performance, but not unattainable
In contrast to other fortunes revealed by ProPublica, such as that of Peter Thiel, whose investments in unlisted shares caused controversy, Weschler built his fortune solely on publicly accessible securities.
“All investments in this account were public securities,” he clarified in a public statement, wishing to dispel any notion of illegitimate advantage.
His performance is all the more remarkable. Between 2000 and 2011, his portfolio posted an average annual return of 22% after fees.
In 2012, with a balance of $131 million, he made a strategic conversion to a Roth IRA, a type of account where withdrawals are tax-free.
The cost? More than $28 million paid to the IRS. But this one-time tax sacrifice eliminates any future taxation on the growth of his portfolio.
The $5 million lunch with Warren Buffett
Alongside his financial exploits, Ted Weschler has a long-standing admiration for Warren Buffett. In 2010 and 2011, he won two charity auctions to have lunch with the Oracle of Omaha, paying a total of $5.25 million.
An unusual investment, but immensely profitable. These meetings impressed Buffett, who hired him in 2012 as an investment manager at Berkshire Hathaway.
Since then, Weschler has been one of the two main investors managing part of Berkshire’s gigantic portfolio, looking for companies capable of absorbing at least $500 million in investment without crossing the 10% shareholding threshold.
A lesson in American retirement planning
Beyond the impressive numbers, Ted Weschler has consistently emphasized the educational message of his journey.
In a country where Individual Retirement Accounts (IRAs) are supposed to provide the middle class with a retirement safety net, his success highlights the inequalities of access… but also the considerable potential of making good use of these devices. His strategy is based on simple but powerful principles:
- Start early (he opened his account at the age of 22),
- Maximize annual contributions,
- Invest 100% in Equities,
- Maintain strict discipline, even in times of crisis,
- And above all, think long-term.
He adds that even if his account had been invested solely in an S&P 500 index fund, its value would have reached around $1.6 million by 2021. Proof that discipline can pay off even without advanced expertise.
An example, not an exception
At a time when concerns about the viability of Social Security are mounting, Ted Weschler’s story highlights the importance of meticulous personal planning.
His success is not based on unattainable privileges or risky speculation, but on sound, reproducible investment principles, provided you start early and stay disciplined.
While not everyone will become a multimillionaire thanks to an IRA, the foundations of its success are within reach of anyone wishing to prepare for a serene retirement: save regularly, invest intelligently, and let time do its work.
An inspiring model for future retirees
Ted Weschler’s story vividly illustrates the power of Individual Retirement Accounts (IRAs) when used with rigor, intelligence and patience.
At a time when younger generations face uncertain retirement prospects, his story offers concrete inspiration.
And perhaps, as he hopes, he will become “an aspirational example of the power of deferred consumption” to motivate tomorrow’s savers.
IRAs FAQs
An IRA (Individual Retirement Account) allows you to make tax-deferred investments to save money and provide financial security when you retire. There are different types of IRAs, the most common being a traditional one – in which contributions may be tax-deductible – and a Roth IRA, a personal savings plan where contributions are not tax deductible but earnings and withdrawals may be tax-free. When you add money to your IRA, this can be invested in a wide range of financial products, usually a portfolio based on bonds, stocks and mutual funds.
Yes. For conventional IRAs, one can get exposure to Gold by investing in Gold-focused securities, such as ETFs. In the case of a self-directed IRA (SDIRA), which offers the possibility of investing in alternative assets, Gold and precious metals are available. In such cases, the investment is based on holding physical Gold (or any other precious metals like Silver, Platinum or Palladium). When investing in a Gold IRA, you don’t keep the physical metal, but a custodian entity does.
They are different products, both designed to help individuals save for retirement. The 401(k) is sponsored by employers and is built by deducting contributions directly from the paycheck, which are usually matched by the employer. Decisions on investment are very limited. An IRA, meanwhile, is a plan that an individual opens with a financial institution and offers more investment options. Both systems are quite similar in terms of taxation as contributions are either made pre-tax or are tax-deductible. You don’t have to choose one or the other: even if you have a 401(k) plan, you may be able to put extra money aside in an IRA
The US Internal Revenue Service (IRS) doesn’t specifically give any requirements regarding minimum contributions to start and deposit in an IRA (it does, however, for conversions and withdrawals). Still, some brokers may require a minimum amount depending on the funds you would like to invest in. On the other hand, the IRS establishes a maximum amount that an individual can contribute to their IRA each year.
Investment volatility is an inherent risk to any portfolio, including an IRA. The more traditional IRAs – based on a portfolio made of stocks, bonds, or mutual funds – is subject to market fluctuations and can lead to potential losses over time. Having said that, IRAs are long-term investments (even over decades), and markets tend to rise beyond short-term corrections. Still, every investor should consider their risk tolerance and choose a portfolio that suits it. Stocks tend to be more volatile than bonds, and assets available in certain self-directed IRAs, such as precious metals or cryptocurrencies, can face extremely high volatility. Diversifying your IRA investments across asset classes, sectors and geographic regions is one way to protect it against market fluctuations that could threaten its health.
