No one who understands the miracle of compound interest better than Warren Buffett, a multi-billionaire and Chair of Berkshire Hathaway, best known as the Sage of Omaha. [Nebraska] and Chair of Berkshire Hathaway. An article in The Wall Street Journal by Jason Zweig (8/28/20) details Buffett’s thinking about time and the value of money. Patience and endurance are the “investing superpowers” that helped him achieve his $82 billion of personal wealth:
From the earliest age, Mr. Buffett has understood that building wealth depends not only on how much your money grows but also on how long it grows. Around the age of 10, he read a book about how to make $1,000 and intuitively grasped the importance of time. In five years, $1,000 earning 10% would be worth more than $1,600; 10 years of 10% growth would turn it into nearly $2,600; in 25 years, it would amount to more than $10,800; in 50 years, it would compound to almost $117,400(2020).
Because we will be discussing the time value of money, we will inevitably be discussing math in this chapter. However, it is not advanced math, so you should find it easy to understand.