Warren Buffett’s Childhood Investment Experience
Warren Buffett, his name is synonymous with successful investing. However, his investment journey is not just a simple success story. Buffett first invested in stocks at the age of 11. At that time, he bought three shares of Cities Service Preferred for $114.75. The key point here is not how early he started, but how he continued to invest consistently.
The Power of a Simple Strategy
Was Buffett’s first investment successful? He sold the stock for a profit, but the more important aspect is his subsequent investment philosophy. If Buffett had invested $114 in the S&P 500 index and reinvested the dividends, that money would have exceeded $600,000 by 2019. This illustrates the magic of compound interest and the power of long-term investing.
Buffett’s Lesson: The Tailwind of the U.S. Economy and Stock Market
Buffett once said, “It wasn’t me. It was the tremendous tailwind of the American economy that did the heavy lifting for every equity investor.” The U.S. economy operates like a powerful engine, benefiting stock investors significantly. Buffett emphasizes that simply following the S&P 500 index can yield substantial returns. This demonstrates how powerful a simple strategy can be compared to complex stock-picking techniques.
The Importance of Patience and Long-Term Perspective
Buffett stresses the importance of patience. The stock market has experienced ups and downs, but the U.S. economy has steadily grown. He said, “You shouldn’t buy to hold for a year, or even two or three years with the expectation that you’ll make money. You might lose money doing that.”
Modern Investment Methods: Low-Cost ETFs
Today, there are ways to track benchmark indices with minimal costs. For instance, the VOO (Vanguard S&P 500 ETF) can be invested in with a low cost of 0.03%, and the SPY (SPDR S&P 500 ETF Trust) tracks the same index with a cost of 0.0945%. These low-cost ETFs are easily accessible and help implement long-term investment strategies effectively.
Conclusion
Warren Buffett’s story is more than just a tale of success. It is a powerful lesson on the strength of long-term investment and patience. Starting from a small investment at age 11, he rode the tailwind of the U.S. economy to achieve tremendous growth. It is never too late for you to start. By adopting a simple yet powerful strategy like Warren Buffett, you can achieve success. If you are a beginner in stock investing, remember Buffett’s words and maintain a long-term perspective. You too might experience the miracle of turning $114 into $400,000.
Reference: Moneywise, “’Forget all the other nonsense’: Warren Buffett once revealed how he could’ve turned $114 into $400K with 1 dead-simple investing move — what it is and why it still works today”