The secret to Warren Buffett's wealth is something you already own

Warren Buffett has got to be the world’s most famous investor. The secret to his success is not his investing skill. It is something that we all have available to us: time.

Discover Buffett’s secrets

He has to be the world’s most famous investor: Warren Buffett.

For those of you who need a refresher, here's some info on him pulled from Investopedia.

In his 92 years on this earth, he built up his wealth to more than an astonishing $100 billion.

Warren Buffett is a phenomenal investor. But you are missing the point if you contribute all his success to just his investing skill.

He’s not just wealthy because he’s a great investor; instead, he’s so wealthy because he’s been a great investor since he was literally a child.

He began serious investing when he was 10 years old.

By 30, he had 1$ million, more than $9.3 million adjusted for inflation.

On his 50th birthday, he already had 40 years of investing behind him.

So far, he’s had 82 years of investing, more years of investing than many are even alive.

Time plays a more prominent role than many of us may think.

The power of time

Imagine Buffett didn’t start investing at 10 as he did.

Instead, he chose a “normal” path of exploring life in his twenties.

Let’s say at 30 years old, he starts investing with $25k he has saved up. Then, after 30 years of making an average return of 22% a year (his lifetime average), he retires from investing to pursue his great hobby of playing table tennis.

What would he end up with today?

Not a 100 billion.

Not even close.

In that case, he would end up with 11,9 million dollars.

A lot of money, but 99,9% less than what he is worth today.

TIME = EVERYTHING when it comes to investing.

Buffett’s skill is being a great investor, but his secret is time.

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What folding paper has to do with getting dollar bills

Let me show you why time is so important. And why it is crucial to start investing as early as possible.

A famous quote often wrongly attributed to Einstein goes like this: “Compound interest is the eight wonder of the world.”.

Here’s why compound interest is so wonderful.

Imagine you have a stack of papers.

Each paper is 1/100th of a centimetre thick.

Let’s say you put 50 on top of each other. How big is your pile?

You probably won’t be surprised by the answer: 50/100th of a centimetre, also known as half a centimetre.

Now, instead of staking the papers on top of each other, imagine you could fold one huge sheet of paper 50 times.

With every fold, the thickness doubles.

How thick would the result be?

This number is very tough to guess for us humans because we are terrible at estimating exponential growth.

The answer?

About 112 million kilometres.

(0,0001 * 2^50)

More than 145 times to the moon and back.

This same effect of exponential growth is also applied to your money when you invest it.

We can leverage the superpower of compounding as long as we give it enough time to work its wonders.

Next week, I’ll show you how compounding can help your investments grow through some example calculations.

Why it matters

When they called compound interest a world wonder, they were right. The more time you give to compounding, the stronger its effects.

And those effects can make you a lot of money.

But, just like Buffett, you got to start early.

The earlier, the better, but it’s never too late.

What is the ideal moment to start, you ask?

Today.

Happy compounding!

Cheers,

Jonne