Too Late to Invest? See How 99% of Warren Buffett’s wealth is Made after Age 50 and How that Can Help Us in Planning Retirement

When Warren Buffett is at age 15, he has only $6,000.

Fast forward 15 years later at age 30, $1,000,000.

It takes him 15 years to grow his $6,000 into 1 million. That is a 166x (times) his capital.

Maybe you think 15 years is too long…you want to retire in 10 years. That is not impossible, but we have to do some more preparation work upfront.

At age 45 (same 15 years interval), Warren Buffett has grown his account to 50,000,000. That is another 50x growth.

From age 45 to age 60 (same 15 years interval), Warren Buffett’s asset grew to 400,000,000 (i.e. 4 billion). That is another 8x growth.

It may look like the growth has slowed down from the prima facie figure of the same 15 years interval, that is lying with figures.

To see the truth, one has to chart the asset figure against Warren Buffett’s age in an excel, you would see an exponential growth line that looks like half of a big smile.

This graph shows us a few things:

Starting is the hardest

You can barely see results in the first year, or even the first few years. Accumulation of wealth and asset takes time — it takes Warren Buffett 15 years to grow to his first million.

Too many people quitted midway, especially if we do not have a lump sum to start with and we are investing with that few hundred of a few thousand, the return and dividend may not even be enough for a dinner. That demotivates many.

2. Lack of discipline and persistence

Many people do not have that dedication, faith, confidence, and discipline to keep investing for 15 years.

Warren Buffett gives people the false impression that he was lucky — he picked the right stocks that grow over time. Yet, note that he did not start with one million capital. He did not have a big lump sum to start with. He grows his money gradually, making investment mistakes along the way (but not deadly), and accumulated $1 million stock in 15 years.

Many people buy and sell at the stock market every day looking for quick way to riches. They are opportunists hoping to profit from the volatility of the market. These people do not have the patience — they are playing the game with a very different approach than Warren Buffett’s. And still, they sincerely and naively think that by buying the same stock that Warren Buffett bought and following the ‘hot tips’ from the news about Warren Buffett’s investment portfolio, they can profit.

What sets Warren Buffett apart is not his stock picking, but his long-term perspective of investing. He is able to do what most people claim to be doing — investing for the long term and stay in the course during all the financial crisis, daily volatility and fluctuation.

If an investor simply chooses blue-chip stocks and invest for as long as Warren Buffett (i.e. 69 years), based on the S&P growing 8–10% on average per year, that investor could grow $5,000 to $3,589,759 (assuming he did not re-invest any dividend income and did not make any other investment other than the $5,000 in his whole lifetime).

Of course, this is a very simplified explanation of how Warren Buffet wins the stock game (and he has other strategies that help e.g. analysing the fundamentals of a business, using options and business structure to maximise profits, asset allocation etc), but this one thing alone sets 90% of the investors apart.

Many of us are not able to persist with long term investing.

We sell with fear when the market falls and we buy with confidence when the market rises. This is human nature but if we have a long-term perspective (and perhaps a little more faith) towards our investment, when the market falls, it could be the best time to pick up some bargains.

3. The rainbow is at the end of the race

If we hang on for longer, if we go the distance, if we are patient enough, the return will grow tremendously and out of proportion against time over the long run.

Rome is not built in one day. To build wealth that will last for generations take time, but time becomes your best friend in this game if you know how. Inflation poses risk of deteriorating the value of our currency, and investment is the opportunity for us to get time on our side.

The key is to

• Have a plan
• Keep a cool head and detach emotion out of our response when the market fluctuates. It means staying on course and continue executing our plan as we have planned, keep minding our own business and we will survive to see the rainbow after the storm.

4. The earlier to start, the better

Based on the long term investment model, the earlier you start, the better.

And it is better to be late than never.

I rushed to start when I was young, thinking that I would benefit from my youth and longer time to accumulate. Yet, I lost more money than ever when I did that. Investing is not a race — and it should not be. Rushing to start without having the right mindset or game plan is more dangerous than if you start late (at least you would not lost as much money). It was only until I realized that and started to really generate a long-term investment plan and a retirement plan that I am able to grow my money properly.

Therefore, although the earlier you start the better, you should not jump off the cliff before you have all the safety equipment prepared and checked. Investment is not risky, it is the investor who is risky.

So make sure you do not make the same mistake as I did — which is simply invest a lump sum of money into a financial product that generates 12–15% for the sake of investing, without having any emergency fund (in case that product fails you) or analysis of how this product fits into your long term investment plan.

5. Planning your financial realistically

After all that we have explored in this article, there is one last thing before you go:

We have seen that money takes time to grow

We noted that the longer we invest, the faster the money grows (exponential curve)

We have realized that Warren Buffett’s stock picking could be a sham (or not a major factor to his success) and his long term investment strategy is what makes him the third richest man on earth

As such, when you create your financial and investment game plan, do create a long-term timeline and have a long-term perspective, which the data has shown will provide you with much more profits than if you are only looking for quick cash today and tomorrow.

And that long term perspective will serve as the vision to guide you through the storm or any crisis in your investment journey.

Note: this is not investment advice. I’m not financial planning professional. Just sharing what is working for me as part of my investing strategy or what I have learnt on my investment journey. Please be reminded to do your own research and consider your own circumstances before making any financial decisions. You could also check with your financial professional to understand what would be best for your situation.