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Time is the most powerful force in investing from "summary" of The Psychology of Money by Morgan Housel
Time is the most powerful force in investing. It sounds almost trite, I know. But it's only when you think about this idea for a while that you start to realize how profoundly powerful it really is. Because time doesn't just allow a few people to accumulate wealth. It allows the majority of wealth to be created in the first place. Think about it this way. The stock market historically returns about 7% a year after inflation. That's a pretty good return, but it's not enough to make you wealthy quickly. To turn a small amount of money into a large amount requires two things: a reasonable rate of return and time. The more time you give it, the more powerful the compounding effect becomes. This is why Warren Buffett, the most successful investor of all time, once said that his favorite holding period for an investment is "forever." Because he understands the power of time in investing. He knows that if you can find solid investments and give ...Similar Posts
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