Eighty Years Since a Boy Bought His First Stock at Age 11
Warren Buffett was born in 1930 and purchased his first stock at age 11. He bought three shares of Cities Service preferred stock at $38 per share and sold when the price rose to $40, earning a $5 profit. However, Cities Service subsequently climbed to $200 per share. Buffett has said this experience taught him the lesson of "buy and hold for the long term." At just 11 years old, he experienced firsthand the essence of compound interest - the importance of making time your ally.
Tracking Buffett's asset trajectory by age reveals the explosive power of compounding's "second half" in vivid detail. At 14, approximately $5,000. At 21, about $20,000. At 30, roughly $1 million. At 39, about $25 million. At 47, approximately $67 million. Over those 36 years, he accumulated about $67 million. Then at 52, approximately $376 million. At 59, about $3.8 billion. At 66, roughly $17 billion. At 72, about $36 billion. At 83, approximately $58.5 billion. And at 93, he reached around $130 billion.
What the Numbers Reveal - Why 99% Is Concentrated in the Second Half
Buffett's net worth as of 2024 was approximately $130 billion. At age 50, his assets stood at about $376 million. This means 99.7% of his wealth was built after age 50. Furthermore, compared to his approximately $3.8 billion at age 60, 97% of his wealth was accumulated after age 60. Out of an investing career spanning over 80 years, the vast majority of his assets are concentrated in the final 30 to 40 years.
This is the mathematical nature of compound interest itself. At an annual return of 20% (close to Buffett's long-term average), assets double in approximately 3.6 years. From age 30 to 50 (20 years), roughly 5.6 doublings occur (about 38x). From age 50 to 90 (40 years), approximately 11.1 doublings occur (about 2,190x). The number of doublings in the latter 40 years is twice that of the first 20 years, but because the effect of each doubling grows exponentially, the difference in asset value becomes orders of magnitude larger.
What If Buffett Were "Ordinary" - A Retirement-at-65 Simulation
Morgan Housel's book presents a fascinating thought experiment. What if Buffett had started investing at 30 and retired at 65, drawing down his assets? Starting with $1 million at age 30 and compounding at 22% annually (close to Buffett's actual track record) for 35 years would yield approximately $1.16 billion at age 65. An enormous sum, yet less than 1% of his actual $130 billion.
The reason Buffett's wealth is so extraordinarily large is not investment skill alone. The decisive factor is that he never broke the compounding chain from age 11 to beyond 90. Other investors have achieved the remarkable annual return of 22%. Jim Simons' Medallion Fund posted an annual return of 66%. However, Simons began managing money at age 50, with an investment horizon less than half of Buffett's. In compounding, the height of returns and the length of the investment period have a multiplicative relationship, and Buffett holds an overwhelming advantage in the latter.Books on Buffett's investment philosophy are numerous, but do not overlook the fact that the greatest secret to his success is "time."
The Mathematical Proof That "It Is Not Too Late"
There is no need to despair that "I do not have 80 years to invest" after seeing Buffett's example. You do not need Buffett-level returns. Even at 5% annual returns in an index fund, the explosive power of compounding's second half is fully realized. If you invest 50,000 yen monthly at 5% annual interest, after 20 years you would have approximately 20.55 million yen, after 30 years about 41.61 million yen, and after 40 years about 76.30 million yen. The increase from year 20 to year 30 is about 21.06 million yen, and from year 30 to year 40 about 34.69 million yen. The growth in the latter 10-year period is 1.6 times that of the earlier period.
Even starting at 40, you have 25 years until 65. Investing 50,000 yen monthly at 5% for 25 years yields approximately 29.77 million yen. Starting at 50 still produces about 13.36 million yen over 15 years. It is never "too late." However, as Buffett's example teaches, the earlier you start, the greater the benefits of compounding's second half.
Next Actions - Applying Buffett's Patience to Your Own Investing
The most important lesson from Buffett is "do not sell." Buffett has held Coca-Cola stock continuously since purchasing it in 1988 - over 36 years. Enter your own investment conditions into a compound interest calculator and check the asset trajectory graph at 10, 20, and 30 years. When you see the curve rise sharply in the second half, you will viscerally understand how wasteful it is to "sell along the way." What is needed to reach the second half of compounding is not genius stock picking, but the patience to hold through market crashes without selling.