Opinion – From Grain to Grain: What heals a wound is what can make you rich

Opinion – From Grain to Grain: What heals a wound is what can make you rich

Misleadingly, many attribute Warren Buffett’s financial success solely to his ability to generate high returns. In fact, he was not the manager who produced greater returns throughout his career in the financial market. There is another factor that was even more relevant.

While Buffett’s comeback is not the best among wealth managers, no one else has achieved his fortune.

For example, the renowned Magellan fund manager at Fidelity Investments, Peter Lynch. Lynch has earned a career average return of more than 29% per year.

Even more impressive is the profitability of Jim Simons. Its Renaissance Technologies hedge fund has earned an average annual return of 66% since 1988.

Buffett, on the other hand, does not reach 20% a year of average return

However, Buffett’s fortune amounts to USD 101 billion, Simons’s is estimated at USD 24.4 billion and Lynch’s does not reach USD 400 million.

I’m sure neither Lynch nor Simons are sad about their wealth. But what makes Buffett have accumulated the most?

We often attribute the volume of initial investment to the reason for its success. But, that wasn’t the difference either.

He founded his investment company in 1956 at just $100 and at 25 years of age.

Of Buffett’s total wealth, 97%, or USD 97 billion, was accumulated after he reached his 60s.

Chances are you already know what made the difference for Buffett.

It was time. He persisted longer than anyone else and took advantage of compound interest. As he said:

The more time your investment has to grow, the greater power of compounding it will achieve“(The longer your investment has to grow, the greater the power of composition (of interest) to reach).

Few want to believe that this is one of their greatest lessons and the simplest to follow.

The vast majority spend months looking for a magic formula and end up wasting, in addition to money, the most valuable teaching, time.

As Buffett said:

“Start early”.

Michael Viriato he is an investment advisor and founding partner of Investor’s House


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