Everybody has a different background. A limited number of people are born in a family with a fair knowledge about investing. I mean, I think we were schooled by our parents and grandparents about the importance of saving money. And keep it in the bank to get paid interest. That’s a sound starting point but incomplete.
How about investing?! When did you realise you could benefit from investing? What was the trigger? Was it a specific event? An auntie that told you?..
In my case it happened to be an accident. Kind of. It was August 2015. I was surfing YouTube for entertainment purposes. By that time I had asked YouTube and Google about ways to make money so many times I lost count. One day YouTube puts on the top of the list of videos for me to watch a lecture by Warren Buffet
I watched it and, to my surprise, I felt I understood what he was talking about. At that moment I stopped believing investing was beyond my reach. Till that moment I thought investing was reserved for maths geniuses. Watching that video made me realise I too could benefit from investing. It prompted me to search and learn. I took notes and made searches based on those notes. From there I found value investing, Benjamin Graham, Philip Fisher, Charlie Munger, growth investing, compounding interest, quality investing, fundamental analysis, Joel Greenblatt, Seth Klarman, Mohnish Pabrai, John Bogle, Morningstar, passive investing, active investing, generational wealth, Howard Marks, Freetrade…
While searching for things to read in order to educate myself on the subject of investing I came across, somewhere in 2016, The Buffett Partnerships’ Letters to Shareholders. These go from 1957 to 1970 and refer to the beginning of Warren Buffett’s investing career prior to his exclusive dedication to Berkshire Hathaway. In those letters I was stunned by what I read under the subtitle “The Joys of Compounding”.
“The Joys of Compounding
I have it from unreliable sources that the cost of the voyage Isabella originally underwrote for Columbus was approximately $30,000. This has been considered at least a moderately successful utilization of venture capital. Without attempting to evaluate the psychic income derived from finding a new hemisphere, it must be pointed out that even had squatter’s rights prevailed, the whole deal was not exactly another IBM. Figured very roughly, the $30,000 invested at 4% compounded annually would have amounted to something like $2,000,000,000,000 (that’s $2 trillion for those of you who are not government statisticians) by 1962. Historical apologists for the Indians of Manhattan may find refuge in similar calculations. Such fanciful geometric progressions illustrate the value of either living a long time, or compounding your money at a decent rate. I have nothing particularly helpful to say on the former point.”
End of quote.
Warren Buffett, Letter to Shareholders - The Ground Rules, January 18 1963
“The Joys of Compounding
Francis I of France paid 4,000 ecus in 1540 for Leonardo da Vinci’s Mona Lisa. On the off chance that a few of you have not kept track of the fluctuations of the ecu 4,000 converted out to about $20,000.
If Francis had kept his feet on the ground and he (and his trustees) had been able to find a 6% after-tax investment, the estate now would be worth something over $1,000,000,000,000,000.00. That’s $1 quadrillion or over 3,000 times the present national debt, all from 6%. I trust this will end all discussion in our household about any purchase or paintings qualifying as an investment.”
End of Quote.
Warren Buffett, Letter to Shareholders - Our Performance in 1963, January 18 1964.
I now knew investing was for me. I also knew I could benefit from compounding and from time in the market. Although being on a low income, I knew I could build generational wealth. Even if it would take 200 years after my death. All I had to do was to plant a seed