Warren Buffett is on everyone’s mind when there’s a subject about the world’s wealthiest people. He has an estimated worth of around $108 billion. However, unlike his good friend Bill Gates, Buffett doesn’t actually live in a $100 million home with its own lake.

I know it might come as a surprise for many, but the 91-year-old chairman and CEO of Berkshire Hathaway isn’t a fan of living like The Kardashians, even if he could afford to do so. In fact, he’s quite the opposite: Buffett has remained famous for his vanity license plate that had “THRIFTY” written on it, and the license plate wasn’t lying at all.

For many of us who will never reach $1 billion, let alone $100 billion, we might learn one or two things from his frugal lifestyle. Here are some of the most important takeaways we got from Warren Buffett and his partner Charlie Munger:

Never fully trust any exotic financial instruments

Buffett and Munger have been very consistent in criticizing the derivatives, catastrophic bonds, crypto, and any other type of financial “innovation”, and it can be seen in how they chose to run Berkshire Hathaway. The company has very little debt, and a big cushion of cash and investments, which has influenced the way Morningstar is managing its own balance sheet.

The whole skepticism that revolves around Wall Street’s creativity when it comes to new product development has wildly influenced our analysts throughout the years, especially when faced with the latest product offering from investment banks. As Buffett once said: “if you have been playing poker for more than half an hour and you still don’t know who the patsy is, then most definitely you’re the patsy.”

Inflation is another important reason to favor economic moats

Until now, it has been much easier to ignore inflation for the last 40 years. However, for those of you who are accustomed to Buffett’s writings, then you must know that inflation was never missing in his conversations in the 1970s and early 1980s.

What he tried to emphasize then was that it’s extremely harsh for companies (even more for those that are most exposed to inflationary cost pressures) to earn satisfying returns for shareholders when the inflation is high.

Only a couple of companies, those that already have very strong economic moats, can actually raise their prices to offset the debilitation of getting more power. The underlying pricing power is one of the many reasons why moat companies are so appreciated. They can easily withstand whatever the microenvironment throws their way.

Volatility isn’t a risk

Since writing big insurance policies is a big part of Berkshire Hathaway’s business, there’s no wonder that risk has taken a big portion of Buffett’s and Munger’s attention. Compared to academic finance theories, their ideas are completely different.

Financial academics tend to use volatility as a proxy for risk (mostly because it’s much easier to measure it), but that might have the effect of concluding that an asset can become riskier if it drops in price, which is exactly the opposite of how any rational buyer would think about a lower price. According to Buffett, the risk is basically the chance you suffer a permanent loss of capital.

Integrity made simple

Buffett famously shared with the employees of the Salomon Brothers a relevant piece of advice in 1991: “lose money for the company, and I will understand. Lose a bit of reputation for the company, and I will be ruthless.”

He also implied the following as a guide of behavior: if you wouldn’t have any problem to have your actions described in detail on the front page of any local newspaper, where your friends and family can easily read it, then go ahead and do it.

Fund boards are lap dogs

This was Buffett’s main conclusion after the famous 2002 letter to shareholders. Even if they had an explicit role as guardians for fund shareholders, fund directors will rarely push back against other fund managers.

Buffett highly criticized corporate boards for pretty much the same reason, as they have an entire culture of rubber-stamping what compensation consultants will put in from of them. He was also very critical of his own job as a board member.

The bottom line is that you should look for board members that have business experience and a lot of meaningful ownership in the company they’re currently overseeing. And even then, you should expect too much.

When it comes to investing, it’s OK to do nothing

Buffett even compared investing to a baseball hitter who waits for a fat pitch. Unlike in baseball, in investing you won’t be called out after three strikes. You can easily let as many pitches whiz past as you like. The concept of patience has wildly influenced the way stocks are rated.

You can have only a couple of stocks to recommend. In some people’s personal portfolios, there will never be a pressure to swing if it’s uncomfortable. Letting cash pile up is just as fine, as there will most certainly be some kind of market correction to bring the prices down again to better levels.

Always keep learning

Both Buffett and Munger love reading, and Munger is an avid fan of science and has a deep understanding of evolution. Some of the most interesting recommendations he has ever made include Influence: The Psychology of Persuasion, by Robert Cialdini, and The Selfish Gene by Richard Dawkins, but also Guns, Germs, and Steel by Jared Diamond.

It’s much better to hire someone with plenty of intellectual curiosity than just a narrow focus on finance, because as Munger once said: “you would be surprised to know how much Warren reads – and how much I read. My children oftentimes laugh at me, as they believe I’m a book with legs sticking out.”

Index funds are a great invention

Even if markets might go crazy, it’s still very difficult to outperform them. Back in 1991, index funds made up a short percentage of overall fund assets. Things have changed a lot since then. As one might believe that Buffett would have been the biggest detractor of index funds, he’s not.

He has praised multiple times index funds as one of the best ways for the wide majority of investors to gain a little bit of exposure to the stock market. He even singled out Bogle for special praise, particularly for launching the index revolution! Buffett even showed that intellectually, you can easily embrace both active and passive investing.

What it means to win the birth lottery

The last lesson can also apply to life in general, and not only to the little amount of time we spend investing. Buffett emphasized many times just how lucky he was to be born right where he was, and WHEN he was.

As he mentioned, if it was for another time and place, his talent for company assessment would have been probably useless. He has famously called this the birth lottery, so it’s a great reminder of all the luck that unfolded in our lives. And yes, if you’re reading this, you’ve probably been extremely lucky so far.

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