Why is Warren Buffett wealthy?

I admire Warren Buffett and very much look up to him. Unfortunately, I only started to follow him closely when I was in my 30s, after I met him in person. He has such a wonderful way of turning complex financial topics into simple digestible concepts that are very easy to understand and put into action.

When I look at his financial journey, I admire his annual return of about 20% vs. the S&P average (1965-2021). For me, the key reasons for his winning record are 1) picking the right companies to invest in, and 2) not trading their stock often because he thinks of them as businesses and not stocks.

But I think there is another reason why he is so wealthy. He has been investing for a very long time. At the time of this writing, Warren is 90 years old and he started investing when he was 11 years old. So he has been in the market for close to 80 years. Thanks to the power of compounding, one of Buffett’s favorite concepts, you don’t even have to be a financial genius to become wealthy if you have that kind of time horizon.

So, invest as early as possible (time in the market is more powerful and lucrative than timing the market), stay healthy to live longer, and make sure your kids get excited about investing and the freedom long-term investing will offer them.