Warren Buffett is known as the "Greatest Investor of all time". He was once the world's richest person. The performance of his Berkshire Hathaway holdings is legendary. His annual reports are studied in business programs around the world.
Known as the Oracle of Omaha, Buffett amazed the world with his steady returns. This generated billions in wealth, making him a household name.
Wouldn't we all like to be like Buffett? The reality is that now we can, at least in terms of the returns he got.
Consistent returns over many years equates to big numbers.
This is the power of compounding, something few in the cryptocurrency world are presently focused upon. Most want the mooning and Lambos. Of course, Buffett could afford a lot of Lambos if he wanted.
For this reason, those who are hunting yield are going to keep growing within the cryptocurrency realm. On Hive, we got a taste of this in the last 24 hours with the increase in interest payments on HBD in savings. We are not sitting at 20%.
That is a figure to pay attention to.
Warren Buffett's Return
These days, with bonds paying very little (or negative around the world), getting a reliable return is difficult. In the traditional markets, it seems like investors have to take on more risk to find a return. The equities market is on fire due to a continue flow of capital. We also see junk bonds gaining in popularity since safer bonds have no yield.
Buffett, over more than half a century, was able to achieve outstanding returns, far outpacing the S&P. What did he achieve?
Warren Buffett's annual letter to Berkshire shareholders was released on Saturday, and as usual the first page compares the annual performance of Berkshire against that of the S&P 500 (^GSPC) since 1965.*
Berkshire shares have seen an average annual return of 20.0% compared to the S&P 500's 10.2% gain during that period.
Notice the return he was able to average? 20%. Where did we see that?
That shows what a powerful opportunity this is. With HBD, we can get the return that the legendary Berkshire Hathaway investor was able to achieve. In other words, we all can be like Warren Buffett.
It is easy to overlook how big a deal this is. At present, we have the tools at our disposal to realistically grow a massive amount of wealth. This is not going to happen in a day or a week. That is not how compounding works. However, over time, if the rate stays the same, we could see enormous portfolios built in a rather risk averse manner.
HBD in savings has very little downside. While this is not risk free, the potential pitfalls are being removed.
Compounding Our Way Through Life
Most only know compounding by being on the short end of the equation. They feel the effect of compounding by looking at their credit card statements. While they get further behind when paying the minimum, the bank, who understands compound very well, is making a ton of money. It understands how the numbers can get rather large over time.
How does this look when put into practice?
Let us have some fun with numbers. We will do $100 at 20% APR for 20 years.
Year 1 $120
Year 2 $144
Year 3 $172.80
Year 4 $207.36
Year 5 $248.83
Year 10 $619.17
Year 15 $1,540.70
Year 20 $3,833,76
In 20 years, at 20% interest, $100 will turn into $3,833 without adding anything else in. We also do this when compounding annually. With HBD, we can do it monthly.
Let us see how that looks.
We put in $100 today, let it earn 20% per year, compounding it each month, and we will have $5,282 after 20 years.
Let us do one more. How do these numbers look?
Results created using this compounding calculator
This took the same conditions as above yet added in $10 per month. As we can see the value at the end of 20 years is over $36K. Anyone who is 40 or under should take this to heart. I can assure you, this will beat most retirement accounts.
For those of you who are 35 or younger, here is a special treat for you. Everything is the same, including the $10 per month. The only difference is we are looking at 30 years instead of 20.
Notice how that extra 10 years makes a huge difference. The key is, when looking at the chart, to hang in there long enough to allow for the compounding to take hold.
The tools Are Being Handed To Us
Anyone can play with the numbers. What if you started with $2,000 as compared to $1,000? Or, instead of putting in $10 per month, one put in $20? Or $50?
Simply be adjusting things upward slightly, we get much larger numbers. Taking the last scenario and adding $20 a month will give someone over $800K at the end of 30 years. Who says that Hive will not make you rich?
Simply doing little things, consistently, over a long period of time delivers enormous results. For those who are young enough, wealth can be in your future if you want it. Hive is starting to deliver the tools.
Amazing what a steady, yet high return will net out to over a long period of time.
That is why the savings rate on HBD is so powerful. Now anyone can be like Warren Buffett.
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