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Bryan D. Linder

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Be Like Buffett

Be Like Buffett

Be Like Buffett

Warren Buffett didn’t become a billionaire overnight. Instead, he leveraged simple concepts over decades to build a vast fortune.

These are the same concepts you can use too.

To demonstrate this, let’s review the history of Buffett’s wealth…

Buffett started growing his money at age 11. He bought three stocks at about $38 a piece.¹

By the age of 30 he had become a millionaire.²

He didn’t become a billionaire until age 56.³

But the vast majority of his wealth wasn’t created until he was past the normal retirement age.

Over the next 36 years, his wealth surged to over $100 billion.⁴ If you include the $37 billion he’s donated,⁵ his net worth increased over 10,000%.

That’s a staggering figure.

And it’s all because he leveraged two simple concepts—the Power of Compound Interest and the Time Value of Money.

The Power of Compound Interest explains the exponential growth of Buffett’s net worth. Buffett used money to earn money. The more money he made, the more he could also earn.

By the time he was 57, he had $1 billion at his disposal to build further wealth. In short, he unlocked a virtuous cycle of growth leading to greater growth.

But it’s the Time Value of Money that explains Buffett’s massive success.

Compounding requires time to get the maximum benefits. The longer money compounds, the greater its ability to build wealth.

And Buffett started compounding early. Very early. Age 10, to be precise.

What if he had started later? Let’s suppose he started at age 30 with $25,000, earned 22% annually (Buffett’s career average), and retired at age 60 to play golf.

His net worth in this scenario? $11.9 million. 99.9% less than his current value.⁶

The takeaway? Be like Buffett.

That doesn’t mean going down the finance nerd rabbit hole. It definitely doesn’t mean adopting the Oracle of Omaha’s diet of fast food and soda!

Instead, leverage the Power of Compound Interest ASAP. Then, be patient and let the Time Value of Money work its magic over years and decades. And rest easy—you’re following in the footsteps of the greats.

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¹ “How Warren Buffett made his billions and became the ‘Oracle of Omaha’” Tom Huddleston Jr., CNBC Make It, Aug 30 2020, https://www.cnbc.com/2020/08/30/how-warren-buffett-made-billions-became-oracle-of-omaha.html

² “Here’s the most overlooked fact about how Warren Buffett amassed his fortune, says money expert,” Morgan Housel, CNBC Make It, Sep 8 2020, https://www.cnbc.com/2020/09/08/billionaire-warren-buffett-most-overlooked-fact-about-how-he-got-so-rich.html

³ “How old 14 of the world’s richest people were when they first became billionaires,” Kathleen Elkins and Taylor Nicole Rogers, Business Insider, Aug 10, 2020 https://www.businessinsider.com/how-old-billionaires-were-when-they-earned-their-first-billion-2016-2#carlos-slim-51-3

Forbes, https://www.forbes.com/profile/warren-buffett/?sh=74048d724639

⁵ “Warren Buffett is ‘halfway’ through giving away his massive fortune. Here’s why his kids will get almost none of his $100 billion,” Nicolas Vega, CNBC Make It, Jun 23 2021 https://www.cnbc.com/2021/06/23/why-warren-buffett-isnt-leaving-his-100-billion-dollar-fortune-to-his-kids.html#:~:text=Buffett’s%20note%20announced%20that%20he,donation%20tally%20to%20%2441%20billion.

⁶ “Here’s the most overlooked fact about how Warren Buffett amassed his fortune, says money expert,” Morgan Housel, CNBC Make It, Sep 8 2020, https://www.cnbc.com/2020/09/08/billionaire-warren-buffett-most-overlooked-fact-about-how-he-got-so-rich.html