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How Warren Buffett turned $10,000 into $100 billion, and four important lessons we can learn from it.

Today i want to talk about warren buffett and how he turned 10 000 into 100 billion and what we can learn from it so as you can see warren buffett’s current net worth is a little over 100 billion and that’s already after he donated 37 billion so in total he generated closer to 150 billion during his lifetime so let’s have a look at his net worth by age he started

Seriously investing with the age of 19 when he had a net worth of 10 000 dollars at the age of about 30 he became a millionaire and then it took another 24 years until he reached 1 billion and since then he grew the 1 billion to almost 150 billion until today but this chart doesn’t tell the full story because it implies that warren buffett achieved all this with

Investing alone but this is not true he actually generated significant parts of his early wealth with starting his own business it’s not common to generate your first million with investing alone so the first lesson is to start your own business to reach your first million warren buffett started his hedge fund in 1956 and ran it until 1969. and as you can see he

Was very successful and outperformed the index significantly and if we go back to the chart we see that during this time his net worth grew from 140 000 to 25 million and this increase was only possible because he ran his own business and generated significant performance fees from his clients of course warren buffett would have generated significant wealth even

Without starting his own business but collecting performance fees significantly supercharged his net worth in the beginning the second lesson is that you need to compound your wealth for a very long time warren buffett is one of the best investors that have ever lived and it took him 37 years of full-time investing to reach 1 billion dollars in net worth in 1965

His partnership took control of a company called berkshire hathaway and after he closed his partnership he became the largest single shareholder of berkshire hathaway and from that point on used berkshire as a vehicle to compound his wealth berkshire hathaway is a publicly traded company and as warren buffett has 99 of his wealth in berkshire the results of this

Company basically track his net worth since 1965. and as you can see he generated a compounded annual gain since 1965 of 20 on average which translates into an overall gain of 2.8 million percent which is in 28 000 bagger that means that each dollar invested in 1965 grew to 28 000 in 2020 and as you can see not everything was sunshine and roses he had significant

Down years for example in 1974 berkshire fell by almost 50 in 1990 it fell by 23 in 1999 by 20 and in 2009 by 32 and during all this time he didn’t sell a single share so the lesson here is don’t be a trader be a long-term investor in fact berkshire hathaway and therefore his net worth dropped by 50 on three different occasions in the past 50 years but he didn’t

Sell and he didn’t trade he simply kept buying and holding because the true power of investing is long-term compound interest so let’s say you have ten thousand dollars and are able to achieve a return of 20 if you invest for 20 years you will have half a million but if you double that to 40 years it will grow to almost 30 million and now imagine that you didn’t

Start with 10 000 but with 50 000 and you are also able to add 10 000 each year then it would grow to 300 million after 40 years that’s the power of compound interest and the last lesson is to only buy what you understand warren buffett only buys companies he understands and he only buys them when they are undervalued and what does undervalued mean undervalued

Means that he buys something for less than it is currently worth or is significantly less compared to the value in the future he doesn’t speculate and he doesn’t trade he simply buys great companies and then sits on them for a very long time and that’s how i try to invest myself as well my investing strategy is to find 100 baggers these are investments that turn

One dollar into 100 with a single investment and if you want to learn more i highly recommend you check out my video about 100x investing and if we’re lucky enough we might even find the next berkshire hat away that will turn one dollar into 28 000 in the future so keep these lessons in mind first the easiest way to reach your first million is to start your own

Business second you need to let compound interest do its magic and compound your wealth for a very long time number three don’t be a trader be a long-term investor instead and if you’re happy what you’re holding don’t sell if you have a down year and lastly only buy what you understand and only buy undervalued assets so that’s it have a great day and see you in the next video

Transcribed from video

How Warren Buffett Turned $10,000 Into $100 Billion By Remo Uherek – Bitcoin Tesla Minimalism