Ahead of the Father’s Day weekend what better time to pass on some sage wisdom from the father of all investment fathers, Warren Buffet.
It’s well documented that at the age of 10 Mr Buffett had an epiphany. The importance time has on money and how it can turn a small sum now into a much larger fortune down the track. In short, the power of compound growth.
Many people underestimate the effect compound growth has on regular amounts contributed and invested over a long time period at their own folly. Recognising that every dollar you spend today has a much greater value in the future teaches you to acknowledge the importance of trade-offs.
Did you know that if you and your partner both invested $284 each a month from the age of 21 to retirement at 65 you would have amassed a sizable $2m nest egg on retirement? This is based on achieving an average return of 7% over that period. Learn more on this topic here.
Once you retire, your family income would be $140k per annum without eating into your capital.
And if you don’t believe in the power of compounding think about this. Last Sunday, Mr Buffet, whose net worth is estimated at US$82 billion, turned 90 years of age. Yet at 65 he had only amassed 10% of his current worth. Investment and time.
Happy Birthday to Mr Buffet who turned 90 this week and Happy Father’s Day to all our Dads, Granddads and Great Granddads out there.