Photo by Jeremiah Higgins on Unsplash
How do you turn a small snowball into a large snowball?
You find yourself a snowy hill to roll it down.
As you roll the snowball down the hill, it grows as it picks up more snow. The larger it gets, the more surface area it has and the more snow it picks up. The size of your once tiny snowball starts to really take off. This snowball effect is the essence of compound interest.
When asked how to turn a small sum of money into a large sum of money, Warren Buffett answered, “Start young.” Like many, Buffett began with a small snowball. However, one key to his success was building his snowball on top of a very long hill. As Buffett says, you can ensure your hill is long either by, “starting very young or living to be very old.” In 1941, Buffett purchased his first stock at the tender age of 11 years and has been scrupulously investing for a whopping 79 years.