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$81.5 billion of Buffett's wealth came after his 65th birthday
💡 Time, not just return rate, is the engine of wealth — compounding pays off spectacularly only over long horizons.
Housel calls compounding the most powerful and least intuitive force in finance. Our brains think linearly, so we routinely underestimate how a modestly good return, repeated over a very long time, produces absurd results.
Warren Buffett's fortune isn't mainly about his returns — plenty of investors beat his ~22% annual average. It's about time. He started seriously investing at age 10. Of his roughly $84.5 billion net worth, the vast majority — around $81.5 billion — was accumulated after his 65th birthday. Had he started at 30 and retired at 60 with normal returns, he'd be worth a tiny fraction of that.
The insight: good investing isn't about the highest returns — it's about earning pretty good returns that you can stick with for the longest time. Compounding rewards duration far more than intensity.
Source: The Psychology of Money: Timeless lessons on wealth, greed, and happiness — Morgan Housel