New research has shed light on a fascinating investment story involving Charlie Munger, the renowned investor and partner of Warren Buffett. Munger, at his final Berkshire Hathaway Inc. meeting in 2023, revealed a remarkable tale of a successful investment made over 60 years ago in collaboration with a friend he met on the golf course.

Back in 1962, Munger, then a real estate lawyer, joined forces with Al Marshall, an unemployed golfer with a knack for investments. The duo decided to combine their resources and each invested $1,000 in oil royalties. Adjusted for inflation, this initial investment would be worth around $10,342 in today’s terms.

Marshall, drawing on his experience in the oil industry, was involved in purchasing oil royalties through auctions. Munger, recognizing the potential for a more profitable venture, used his legal expertise to structure a deal that would prove to be highly lucrative. Together, they established an AB trust, which provided a tax shelter that has since been banned due to misuse.

Marshall shared that even years later, he continues to receive a monthly income of $2,000 to $3,000 from their investment. The success of their collaboration is evident as Marshall mentioned that their initial $1,000 each has now generated around half a million dollars for each of them.

Over time, this modest investment grew into a significant source of passive income, yielding an estimated annual return of $70,000 for both Munger and Marshall. These returns not only allowed Munger to draw a $100,000 salary from Berkshire Hathaway but also enabled him to preserve the majority of his $2 billion fortune in the company’s stock, which did not pay dividends.

Charlie Munger’s strategic vision and partnership with Al Marshall exemplify the power of a well-thought-out investment and the long-term benefits it can bring. Their story serves as a reminder of the potential for substantial returns that can arise from astute financial decisions made decades ago.