There is one secret that helps "the Oracle of Omaha" as a super-rich 90-year-old billionaire: he has used the power of compound interest since he was 10 years old. The earlier we understand compound interest, the richer we become.

The chairman of the Berkshire Hathaway group is one of the greatest investors of all time, having amassed a net worth of $ 82 billion. About 90% of them come to him after 65 years old. A good investment is very important, but investing well over the long term is even more important.

In his letter to shareholders dated January 18, 1965, he mentioned the "Methuselah technique", which he explained as a combination of long life and investment that yielded attractive and stable returns. Buffett made his first investment - buying 3 shares of Cities Service - from 78 years ago.

From a very young age, Buffett understood that accumulating wealth depends not only on how your money is reproducing but also on how long it lasts.

At the age of 10, Buffett read a book about how to make $ 1,000 and immediately understood the importance of time. In five years, an investment of $ 1,000 with a 10% yield will be worth more than $ 1,600. After 10 years the figure is nearly 2,600 USD, after 25 years the amount is 10,800 USD and after 50 years 1,000 USD has turned into 117,400 USD.

It sounds simple enough, but this is difficult to do for most of us. People often underestimate the power of compounding, and over time that error gets worse.

Try to solve a problem: if the Dow Jones - at 28,500 points this week - grows by 1.6% per year, by December 31, 2029, how much will it be? The answer is that with such gentle growth, Dow Jones was able to reach 100,000 points.

What if the Dow Jones grew 4.6% on average each year? This index will reach 1,000,000 by the end of this century.

If growth is 7.7% - still lower than the 8.4% average that the Dow Jones has achieved over the last 30 years - that number is 10 million!

The figures given above assume investors have diversified approaches. Focusing on just a few investments and holding them for many years, even decades brings huge profits to Buffett, but it may also bring nothing but suffering for investor's uncertainty and not fully aware of the power of compounding.

Even when interest rates are low, continuous growth over a long period can turn a small amount into a mountain of money. That is the important thing that investors need to remember, especially in the current context of intraday trading.

Buffett also offers another lesson: stay flexible. The older he got, the more diverse his investment method became.

Decades ago, he reaped the highest return on the smallest and cheapest stocks he could find. Today, the investment that makes up the largest portion of Berkshire Hathaway's portfolio is technology giant Apple. Actually, Buffett wasn't the one who started the deal - it was assistants Todd Combs and Ted Weschler, but over time he grew more interested in Apple.

At market price last week, Berkshire's holdings of Apple holdings are worth about $ 123 billion, or 24% of Berkshire's total market capitalization - a surprising figure that Buffett has always avoided before avoiding tech stocks because he simply doesn't know anything about the industry.

According to the calculations of AJO, an investment company based in Philadelphia, an average investor will hold Apple shares for less than 25 weeks. But Berkshire has held Apple stock for 4.5 years, and the numbers certainly don't stop there.

When he spent $ 31,500 on his home in Omaha, he called it "Buffett's foolish decision" because he thought "$ 31,500 will turn into $ 1 million in the future".

Buffett's friends and relatives often hear him repeating questions like "should I spend $ 300,000 for a haircut?" or "I'm not sure I want to spend $ 500,000 that way." For him, spending a few dollars now can cause hundreds of thousands of losses in the future because those currencies cannot continue to proliferate.

Calculating every penny does not mean you will become stingy. That's how you realize how important it is to measure carefully the things you have to trade for. The trick is to weigh the urgency, the things you'll get from your money, with the money multiplied after a few years or decades of compounding benefits.

At the age of 90, Buffett continues to show that persistence is the super-powerful secret to investing successfully

▶️Telegram :
📚Edu Station :
⛑Support Form :