Another way to think about compound interest is as a snowball effect.
You start out with a small snowball that you pack tightly into a fist-sized ball. Then you add more snow to it. Once it gets big enough, you start rolling on the ground. Then send it down the hill. As it picks up speed, it picks up more and more snow...
Compound interest works the same way with your money. Start out small, and over time, it grows and grows faster and faster. It's packing on top of the existing money.
Making 10% on a $3,000 investment is $300. People are going to tell you it's not worth it.
❄The snowball starts rolling...
Making 10% on a $300,000 investment is $30,000. People will ask questions.
❄The snowball is rolling...
Making 10% on a $3,000,000 investment is $300,000. People are going to call it luck. But you know it is the snowball!
Stick to the plan like snowflakes stick to the snowball, and continue to accumulate.
Warren Buffett stuck with it. Here is his snowball effect:
Age:
14 ~ $5k
21 ~ $20k
26 ~ $26k
30 ~ $1M
33 ~ $2.4M
35 ~ $7M
37 ~ $10M
39 ~ $25M
43 ~ $43M
44 ~ $19M
47 ~ $67M
52 ~ $376M
53 ~ $620M
56 ~ $1.4B
58 ~ $2.3B
59 ~ $3.8B
66 ~ $17B
72 ~ $36B
83 ~ $58.5B
92 ~ $109B
It is a case study in compounding.
