Charlie Munger pockets $70,000 a year from a $1,000 investment he made in 1962 - and has likely raked in over $1 million in total

• Charlie Munger receives $70,000 a year from a $1,000 purchase he made over 60 years ago.
• Warren Buffett's right-hand man has likely made over $1 million from oil royalties bought in 1962.
• Buffett's father also bought oil royalties, and the investor's sister still receives monthly checks.

Charlie Munger rakes in $70,000 a year from a $1,000 investment he made six decades ago — and has likely collected over $1 million in total from the lucrative wager.

Warren Buffett's business partner disclosed the initial cost of his oil royalties, and what they yield today, during Berkshire Hathaway's annual shareholder meeting on Saturday.

Munger placed his oil bet in 1962, after meeting a businessman named Al Marshall during a husband-and-wife golf tournament. At the third hole, Marshall outlined his plan to bid in a local oil-royalty auction. Munger responded, in characteristically blunt fashion, "You're doing it all wrong."

Marshall enlisted Munger to join his bid and sort out the legal and financial aspects of the purchases. Munger's deal structure included an ABC trust, a type of tax shelter that has since been outlawed.

"I'm still getting $2,000 to $3,000 a month from that," Marshall told author Janet Lowe for her book, "Damn Right!: Behind the Scenes with Berkshire Hathaway Billionaire Charlie Munger."

"We only put up $1,000 each and we've each probably made a half a million out of it," Marshall said ahead of the book's release in 2000.

Munger, a billionaire investor and Berkshire's 99-year-old vice chairman, relayed the story himself during Daily Journal's shareholder meeting in 2016.

"I soon realized that under the peculiar rules of an idiot civilization, the only people who were going to bid for these oil royalties were oil royalty brokers, who were a scroungy, dishonorable, cheap bunch of bastards who realized that nobody would ever bid at their price," he said.

"50 years later we were getting $100,000 a year on that investment," Munger continued. "The trouble with that story is that it only happened once."

Whether Munger is receiving $70,000, $100,000, or some other figure from the royalties each year, it's safe to say he's made a fortune from them over time.

This type of passive income helps explains why Munger has been happy to collect a modest $100,000 salary from Berkshire for several decades now. He also keeps the vast majority of his roughly $2 billion fortune in Berkshire stock, which doesn't pay a dividend.

During Saturday's meeting, Buffett revealed that Munger isn't alone in benefiting from age-old oil royalties. The famed investor and Berkshire CEO noted his own father bought $1,000 to $1,500 worth of them before he died, and they've now been passed down to Buffett's younger sister, who receives monthly checks to this day as a result.

Read more: Warren Buffett and Charlie Munger sound off on banks, rule out Occidental takeover, and warn on AI. Here are 10 highlights from Berkshire Hathaway's annual meeting