Learn Compounding Like Warren Buffett
Sheila Tanaka
04 Feb 2025
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People desire extravagant results on their investments because they are impatient and want to get rich quickly! So, what is the ideal investment return that can make an investor wealthy? Let's learn again from Warren Buffett.
Many people desire very large profits for their investments, tens of percent even hundreds of percent per year. Many traders or investors also show off their investment returns of hundreds of percent per year. Many people also fall into fraudulent investments that offer promises of hundreds of percent profit per year. Why is all this happening?
People want extravagant results on their investments because they are impatient and want to get rich quickly! Then how much investment return is ideal, which can make an investor very rich? Let's learn again from Warren Buffett.
Does anyone know what percentage Warren Buffett's annual investment return is? Warren Buffett, the world's largest investor, achieved investment gains of only 24.7% per year consistently for 49 years! Surprisingly, the Oracle of Omaha's returns are not as bombastic as the returns of many investors in the world.
However, what makes Warren Buffett successful is none other than PATIENCE and CONSISTENCY! I believe that if we are clever in utilizing stock price fluctuations, we might be able to get more than 24.7% per year. But the question is, can we be consistent with that tens of percent return per year? Let's not get extraordinary returns, but also suffer enormous losses!
Warren Edward Buffett (born in Omaha, Nebraska, United States, August 30, 1930; age 83) is an American investor and businessman. He is nicknamed the Oracle of Omaha. Buffett has amassed a huge fortune from his shrewd investing through his company Berkshire Hathaway, where he holds 38% of the shares.
With an estimated net income of US$44 billion in 2005, he ranked second as the second richest person in the world according to Forbes, behind Bill Gates. In 2010, the wise man from Omaha managed to oust Bill Gates from the first rank of the richest people in the world, which he now occupies.
According to Forbes magazine, his wealth increased by US$10 billion at the same time to US$62 billion, truly fantastic, beating Bill Gates whose achievement was only an increase of US$2 billion per year at the same time to US$58 billion.
People want extravagant results on their investments because they are impatient and want to get rich quickly! Then how much investment return is ideal, which can make an investor very rich? Let's learn again from Warren Buffett.
Does anyone know what percentage Warren Buffett's annual investment return is? Warren Buffett, the world's largest investor, achieved investment gains of only 24.7% per year consistently for 49 years! Surprisingly, the Oracle of Omaha's returns are not as bombastic as the returns of many investors in the world.
However, what makes Warren Buffett successful is none other than PATIENCE and CONSISTENCY! I believe that if we are clever in utilizing stock price fluctuations, we might be able to get more than 24.7% per year. But the question is, can we be consistent with that tens of percent return per year? Let's not get extraordinary returns, but also suffer enormous losses!
Warren Edward Buffett (born in Omaha, Nebraska, United States, August 30, 1930; age 83) is an American investor and businessman. He is nicknamed the Oracle of Omaha. Buffett has amassed a huge fortune from his shrewd investing through his company Berkshire Hathaway, where he holds 38% of the shares.
With an estimated net income of US$44 billion in 2005, he ranked second as the second richest person in the world according to Forbes, behind Bill Gates. In 2010, the wise man from Omaha managed to oust Bill Gates from the first rank of the richest people in the world, which he now occupies.
According to Forbes magazine, his wealth increased by US$10 billion at the same time to US$62 billion, truly fantastic, beating Bill Gates whose achievement was only an increase of US$2 billion per year at the same time to US$58 billion.
In Smart Traders Not Gamblers, Ellen May wrote about the importance of setting trading / investment targets. The trading / investment targets we have must be rational, especially if we are beginners in stock investment. A 20% annual investment target is quite reasonable for a beginner. Interesting, isn't it?
Now if we consistently get 20% per year, how long will it take for our money to double? Let's calculate! According to Albert Einstein, how long our money can double can be calculated using the Rule of 72. What does that mean? If our profit target is 20% per year, then to double our money, we just divide 72 by 20. So if our target is 20% per year, then with the Rule of 72, our money will double in 3.6 years!
The power of Compounding is Warren Buffett's weapon in creating the largest profit in the world. The question is, are we patient enough to hold our healthy stocks for years, even decades? When Ellen May conveyed that long-term stock investment is ideally more than 5 years, many say it's too long. There is nothing too long for a long-term investment. If we are impatient, we are better off being a trader. Getting rich through trading is not solely due to powerful strategies, but more driven by PATIENCE & CONSISTENCY. Will we be patient and consistent in our investments? The sooner we start investing/trading, the better.
Closing this writing, please pay attention to Warren Buffett's advice. Warren Buffett never carries a cellphone and there is no computer on his desk. Here is his advice for young people. Avoid credit cards and invest in yourself and remember:
Closing this writing, please pay attention to Warren Buffett's advice. Warren Buffett never carries a cellphone and there is no computer on his desk. Here is his advice for young people. Avoid credit cards and invest in yourself and remember:
- Money doesn't create people but people create money.
- Live simply.
- Don't do what others say, listen to them, but do what you think is right.
- Don't force yourself to have branded goods, wear what is comfortable for you.
- Don't waste your money on unnecessary things, use the money to help those in need.
- No matter what others say, they cannot control your life. You are fully in control of your life.