While most 11-year-olds were pitching pennies, he was buying stocks.
And he was darn good at it.
By the time he was 30, his net worth (adjusted for inflation) was $9 million.
Over the next several decades, his net worth grew and he became a legend.
Today, he’s known as the greatest investor … ever.
And yesterday was his 92nd birthday.
Happy birthday, Warren Buffett.
Buffett has been investing with the same approach for more than six decades.
Basically, he buys quality businesses at attractive prices and then holds them forever.
But I’m sure you knew that.
Heck, since you’re a Real Talk reader, you’ve probably heard me say that a zillion times.
But here’s something — I bet you dollars to donuts — that you didn’t know about Buffett.
And when I share it with you, it’ll knock your socks off…
Wet Snow + Long Hill
Today, Buffett has a net worth of more than $100 billion.
However, when he was 65 years old, his net worth was a sliver of that.
In fact, Buffett made more than 70% of his net worth after he was 65 years old!
The power of compounding: Buffett built most of his wealth after age 65.
Compounding at a high rate for a long period of time equals huge returns.
In fact, Buffett calls it the snowball.
To make a good snowball, the important thing is finding wet snow and a really long hill.
Buffett’s not the only one that knows the power of a snowball…
Jim Simons — the founder of hedge fund Renaissance Technologies — did it.
He started later in life at 50 … and saw better returns than Buffett.
Simons had less than half as many years to compound his money.
And he did it at 66% annually since 1988 — taking his net worth to about $23 billion.
To compare, Buffett made roughly 22% annually.
Just imagine if Simons had started at 11 years old!
Here’s how you can do it…
Slow and Steady
Here’s the Real Talk: It’s not about earning the highest return (swinging for the fences).
If you swing for the fences and lose? Game over. Back to GO (without collecting your $200).
Your goal is to see your net worth increase by leaps and bounds over time.
A compound annual growth rate of 10% doubles your money in over seven years.
And 15%? Takes less than five years.
See what I’m saying?
The last thing you want to do is lose money.
That’s why, in Alpha Investor, we own companies that are outstanding compounders.
Their businesses will be substantially higher in five to 10 years. And my best advice is to let them do their thing.
Charlie Munger, Warren Buffett’s business partner, sums it up best: “The first rule of compounding: Never interrupt it unnecessarily.”
So, if you’re not an Alpha Investor yet … why not?
Regards,
Charles Mizrahi
Founder, Real Talk
