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The Impact Of Long-Term Compounding
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The Impact Of Long-Term Compounding
It’s incredibly corny example, but take Warren Buffett. This is how he built his wealth over time. Source: dadaviz.com Don’t look at the numbers (or random x-axis). Look at the relative growth. Between age 32 and age 44, Buffett improved his net worth by 1257%. That’s pretty exceptional growth over 12 years, right? Especially if you take into account that he lost a lot of money in his 40s. But that’s not the point here. Look at this. From age 44 to 56, Warren Buffett’s wealth increased by a ridiculous 7268% over a similar time period. And of course, this is his net worth and there’s always luck involved with these type of numbers. Plus, his net worth is based on stock prices — which means a big portion of it could be all gone tomorrow. But still, it’s about the growth he achieved over time. Another thing: Buffett acquired 99% of his net worth after he became 50. Think about all those spoiled idiots in their teens, twenties, and even thirties (me included), who complain about the slow progress of their career. This helps you to put things in perspective. Anyway, there’s a lot of Warren Buffett porn on the internet. And a lot of people pretend you can become rich by investing in the stock market. All you need to do is to buy their course that contains all the secrets to wealth. Yeah right. It doesn’t work that way. Personally, I hate stocks, and I think normal folks should stay away from Wall Street. I prefer real estate. However, Buffett is the perfect example of sequential success. You can achieve big things with small actions, that build up over time. This is not only true for money. The same concept applies to skills, health, and relationships. You don’t build a strong body in a day, month, or even a year. It takes years of consistent effort. Shortcuts don’t exist, no matter how ‘smart’ you work. For example, cyclists under the age of 28 rarely win big races like The Tour The France because it takes them years to build the strength, stamina, and mindset you need to win. If you want to see the impact of compounding in your own life, it requires you to focus on one thing at a time (for every aspect of your life) and always look at the bigger picture. It comes down to this: You’ll get there if you put in the work. Who cares if it’s tomorrow or 20 years? It will happen. That’s all that matters. |
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