If you plant a tree today, it might take awhile to grow, but you’ll be able to sit back and enjoy the shade beneath its boughs for many years to come. The same principle applies to long-term investing. If you invest now, you will reap the benefits later. Let’s take Warren Buffett’s career as an example.
Buffett started investing at a young age, purchasing his first stock when he was only 11. By the time he was 15 years old, he had a net worth of about $6,000. An impressive amount for a high school sophomore, but merely a drop in the bucket compared to his current fortune.
Buffett is third on the Forbes Billionaires list with a net worth of $72.7 billion. He earned the majority of this sum only after his 50th birthday. The Dadaviz blog, with the help from Dividend.com, put together the chart below showing Buffett’s journey from trading pinball machines as a teenager to making billions after the age of 50.
Some of the notable milestones in his career happened at the age of 30 when he topped $1 million, at 37 when he made $10 million, and at 56 when he hit the 'Billion Dollar' mark. In 26 years, he turned his $1 million into more than a billion Dollars. The effect of compounding interest is mind-blowing.
How did he do it?
By following a simple strategy and having the correct mindset about investing.
Warren Buffett combines value investing principles with patience, a long-term commitment and an eye for the future to achieve his magnificent results. It is a powerful strategy that pays off, maybe not immediately, but definitely in the long run.
What do you need to do?
Start investing as soon as possible
The sooner, the better. Buffett started when he was 11 and still wishes he invested sooner. So what are you waiting for?
Pick sound stocks with economic moat
Pick undervalued stocks, so you have a margin of safety. Make sure you understand a business's industry before purchasing any of its shares, and invest in companies that are leaders in their fields.
If you have done the necessary research to identify sounds investments and you’ve purchased some shares, you should sit back, relax and watch your returns rolling in year after year. Don’t overreact when the market becomes volatile. Trust your intuition and refrain from making decisions fueled by emotion.
Take advantage of compounding interest
Reinvest all of your returns, including dividends. In doing so, you take full advantage of compounding by earning interest on top of interest.
Value investing is an investment strategy that I highly recommend. The results speak for itself. So don’t waste any more time, plant your “money-tree” today by buying a few value shares and watch it grow into a wealthy future.
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