1. The magic ingredient in compounding is time
Compounding helps investors build wealth by generating returns on investments over time. These returns then continue to compound and help grow assets. Compounding is sometimes referred to as earning interest on interest.
Many of us know that compounding works, but we can t really understand it on a huge scale. Housel delivers some perspective by taking a look at Warren Buffett.
Buffett is well known as one of the wealthiest investors of all time, but it s not all because of his skill as an investor.
Buffett started investing when he was a kid, at the young age of 10, so his money has had decades to compound. Most of us can t go back in time and fill up investment accounts we never had, but we can start investing now. The longer your money stays in the market, the more it will grow.
| UPDATED: 22:55, Wed, Dec 30, 2020
Link copied Sign up for FREE health tips to live a long and happy life
SUBSCRIBE Invalid email
When you subscribe we will use the information you provide to send you these newsletters. Sometimes they ll include recommendations for other related newsletters or services we offer. Our Privacy Notice explains more about how we use your data, and your rights. You can unsubscribe at any time. This article contains affiliate links, we may receive a commission on any sales we generate from it. Learn more
Unfortunately, there’s a lot we don’t learn about money in school which leaves many of us in a permanent state of confusion when it comes to our finances. Ignorance is not bliss in this regard, however, and not having a grasp on how to manage your money could leave you in hot water down the line.