Warren Buffett and Compound Interest!

Warren Buffett and Compound Interest!

"My Wealth has come from a combination of living in America, some lucky genes, and compound interest" - Warren Buffett

Warren Buffett is an investor, business entrepreneur and visionary. He was born in and remains in Omaha Nebraska.

For most of his life, Buffett has been entrepreneurial yet he did not make most of his wealth until he was in his 30's and 40's. In the post-modern world he is the second richest man in America, with only Bill Gates and his technology company Microsoft being 10 billion dollars in front of him in stock holdings. Unlike Gates however, Buffett does not believe in having stock in technology or anything which could potentially collapse or fail over night. Buffet fancies himself a conservative in his values and would rather invest in companies and consumerables which would have a long-term gain.

Because of this he has continued to believe throughout the duration of his life in the power of stocks, bonds and similar types of investment capital which work towards long-term financial and economic solutions. This type of capital, he believes in particular could be used and compounded in interest, dividends and etc. in order to create so much wealth over a long period of time that someone who started out with a small investment could in 5-40 years using buffets method... Retire from the workforce quite wealthy and rich. This is also echoed by Robert Kiyoskai in his work on the four quadrants, something we will talk more about tomorrow.

Buffett is eccentric and he lives in his house in Omaha which he bought in the mid to late 1950's and owns to this day. He lives below his means and even owns a car which he has not updated since the 1970's and only spends on himself as an annual income of 50-thousand American dollars per year. (Business income). A few years ago, due to his advanced age, he was forced to be less frugal and buy himself a private jet named "The Indefensible" which he used both in his  private business dealings and also in his work on Philanthropy.

Buffett spends quite an amount annually on philanthropic enterprises which he believes will ultimately help the future of humanity on this planet survive. For buffet survival and success are tied together as one and this is why the focus on successful philanthropic enterprises for Buffett is so strong. But what is the key to Buffett's success, be it in business, Philanthropy or in life? Buffett draws his success down into two words. These are "compound" and "interest". Buffett believes that most of his success comes from the compound interest accumulated by his investments over his lifetime. He notes that for most of his investments made, he will invest not in the shorterm, not even in the long-term but within the scope of his own and others lifetimes.

Buffett does not care if stock loses 200 points one day and gains 800 points another. What he is looking for is the longevity and survival of the stock through which he has made an investment over the course and duration of his lifetime.When Buffett started investing he only had $9,800 which was quite a small fortune back in the 1950's. He was able to save it up and made $127,000 in savings. Buffett estimated that he could live off $12,000 per year and make a huge fortune off the rest via compound interest.

When he found that he became quite wealthy, other people started to give him their money and pay him to look after their investments, money and similar forms of capital and that is how Buffett's business Berkshire Hathaway was born. So what did Buffett have that other men and woman who invest did and do not? Simple, Buffett has a vision and having a vision is important to your success wherever you are in life that and perhaps understanding compound interest the way Buffett does.

Daniel Counts. November the 5th 2013