Investing in Genius
Why is it that it seems like we all want to re-invent the wheel? I have been a part of the investment industry and the financial field for over 30 years. Throughout my career, many well-meaning investors and investment professionals have taken huge losses and failed miserably in their attempt to match the performance of Warren Buffett. Warren Buffett is quite simply a genius. If you have good investment returns over four or five years, you are talented. But if you have great investment returns for four or five decades, you are a genius.
Buffett’s great success is magnified when you realize that his company, Berkshire Hathaway, has gone from a manageable sized corporation when he began and has grown to be a behemoth on the financial landscape. It is much more difficult, in some ways, to effectively invest a huge amount of money as opposed to a more modest portfolio. Books have been written, courses have been taught, and people have struggled for years seeking the success elements that have made Warren Buffett’s lifetime performance possible.
I determined years ago that I don’t need to fully understand the nuances of how Mr. Buffett captains his financial ship when I can simply get on board. You don’t have to invest like Warren Buffett, you can invest in Warren Buffett. A $1,000 investment in Berkshire Hathaway in 1964 has a current value of $16 million. If you had invested $1000 per year or $20 per week in Berkshire Hathaway beginning the same year, your portfolio would be worth $126 million today.
I believe in the ancient wisdom that the best time to plant a shade tree was 30 years ago, but the second best time to plant a shade tree is today. It’s not too late and you haven’t missed the boat.
Compounding returns are indeed the Eighth Wonder of the World. You can simply invest a set amount of money each month in an index fund or Mr. Buffett’s Berkshire Hathaway if you choose, and let the power of time and compounding work for you. Many people understand compounding as it relates to their credit card balance or their adjustable rate mortgage; but if you will get on the positive side of the equation, you can invest in your future just like Warren Buffett does.
The fastest growing group of new millionaires is the 401K millionaires. The ability to invest pre-tax dollars, compound tax deferred growth, and in many cases, get a match from your employer, is the golden key to your financial success. Warren Buffett’s advice to his heirs is to invest in index funds. This is something you and I can do today, and it will change our financial future tomorrow.
As you go through your day today, consider Warren Buffett and follow the leader.
Today’s the day!