Page 55 - Morgan Housel - The Psychology of Money_ Timeless Lessons on Wealth, Greed, and Happiness-Harriman House Limited (2020)
P. 55
The big takeaway from ice ages is that you don’t need tremendous force to
create tremendous results.
COBACOBA
If something compounds—if a little growth serves as the fuel for future
growth—a small starting base can lead to results so extraordinary they seem
to defy logic. It can be so logic-defying that you underestimate what’s
possible, where growth comes from, and what it can lead to.
And so it is with money.
More than 2,000 books are dedicated to how Warren Buffett built his
fortune. Many of them are wonderful. But few pay enough attention to the
simplest fact: Buffett’s fortune isn’t due to just being a good investor, but
being a good investor since he was literally a child.
As I write this Warren Buffett’s net worth is $84.5 billion. Of that, $84.2
billion was accumulated after his 50th birthday. $81.5 billion came after he
qualified for Social Security, in his mid-60s.
Warren Buffett is a phenomenal investor. But you miss a key point if you
attach all of his success to investing acumen. The real key to his success is
that he’s been a phenomenal investor for three quarters of a century. Had he
started investing in his 30s and retired in his 60s, few people would have
ever heard of him.
Consider a little thought experiment.
Buffett began serious investing when he was 10 years old. By the time he
was 30 he had a net worth of $1 million, or $9.3 million adjusted for
inflation.¹⁶
What if he was a more normal person, spending his teens and 20s exploring
the world and finding his passion, and by age 30 his net worth was, say,
$25,000?
