Many already know the story of Berkshire Hathaway (NYSE: BRK-B). In 1962, Warren Buffett began buying the shares of a struggling textile company that was trading well below its book value.

Just five years later, Buffett would buy the entire company, making it his crown jewel. By 1970, Buffett’s ventures funded by Berkshire’s company’s cash flow were blossoming, particularly in insurance. The insurance business offered Buffett something he dearly loved — loads of cash.

As you probably know, insurance companies collect premiums and hold them until presented with claims. In the meantime, it can invest that money — called the “float” — and earn a nice return. Buffett and Berkshire simply take the float and buy undervalued companies that generate even more cash, then hold for the long term.

The rest, as they say, is history. But I bet you haven’t heard this story before…

Taking A Chance On A Bright, Young Kid…

Back in 1957, a midwestern couple named Bill and Carol were just like any other husband and wife. They wondered about their financial future: making ends meet, retirement, etc.

They heard about an investment class being taught by a bright 21-year-old kid named Warren Buffett. Rumor was, he impressed just about everyone he came in contact with. So, they decided to check it out. They joined about 20 other folks that night for the class called “Investing Principles.”

What they didn’t know was that this kid wasn’t just impressive… He was also a genius. As the story goes, by the end of the talk, Dr. Bill Angle, a physician, announced to the crowd, “I’m putting $10,000 in. The rest of you should, too.”

His wife, Carol Angle (also a doctor), was a believer, too. They would later up their contribution to $30,000 — half their life savings. It turned out to be the best decision they ever made. A 1998 article in Forbes mentioned their story.

Now, the Angles — and their story — are certainly impressive. Dr. Carol Angle, for example, is one of the nation’s leading experts on lead poisoning. And when that article was written, the Angle family was worth more than $300 million.

But there are dozens of families with a similar story. As the Forbes article recounts, there were at least 30 families in the local area (and many more elsewhere) worth at least $100 million. All thanks to a young man who had to take a Dale Carnegie course on public speaking before he had enough confidence to get up in front of a crowd.

They were called “The Berkshire Bunch.”

Lessons From The Berkshire Bunch…

I wanted to share this little story with you today because sometimes we forget that it isn’t just Buffett who became rich from Berkshire Hathaway. The regular folks who invested with him amassed great wealth, too.

The truth is that regular folks don’t have to hit the lottery by happening to meet the next Warren Buffett, either. Instead, we can try to emulate Buffett’s success by examining his investment approach.

How, you ask?

Dr. Angle said it best in the Forbes article when she said:

“He brainwashed us to truly believe in our heart of hearts in the miracle of compound interest.”

This is why I continue to pound the table about compounding and reinvesting dividends. It’s the only free lunch you’ll get in the market.

Over at High-Yield Investing, many of our readers use the dividends generated by our portfolio to buy even more shares of our holdings. The result: dividend paychecks that grow with each passing month.

By reinvesting dividends in each of these holdings, they can create an income portfolio that grows with each passing year. When they’re ready, they can simply “flip the switch” to live off the income for retirement.

Closing Thoughts

My advice: learn to love cash and compounding.

The truth is anyone can create lasting wealth in the market by using a “get rich slowly” approach like the one we use over at High-Yield Investing. It’s not too late for you to get started, either. All it takes is a solid foundation. And to get you started, we have a special report about five “bulletproof” income payers who have proven to be so strong, reliable, and generous… that they can be counted on, no matter what happens with the economy.

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