Why It Pays to Start Investing Early
Warren Buffett, widely regarded as the world’s most famous investor, gained a powerful advantage by starting young.
On March 11, 1942, at just 11 years old, Buffett made his first investment: three shares of Cities Services preferred stock for $114.75. In his 2021 letter to Berkshire Hathaway shareholders, he recalled that on that same day, the Dow Jones Industrial Average (DJIA) closed at just 99.
Fast forward to March 31, 2025 — the DJIA stood at 42,001.76. That’s more than a 420-fold increase since Buffett’s first stock purchase.
Throughout those years, markets endured wars, recessions, and major crashes. Yet, investors who simply stayed the course — tracking the overall market, as represented by the DJIA — saw substantial rewards.
The Power of Compounding
For new investors, compound interest can feel almost magical — but it’s grounded in simple math.
Even modest investments, left untouched for decades, can grow into substantial wealth.
Consider this: someone who invested $10,000 in a portfolio that mirrored the Australian share market at the start of each decade from 1970, and held on until February 28, 2025, would have seen impressive growth. (Data sourced from Vanguard’s Digital Index Chart.)
As the numbers show, time is a powerful multiplier. The longer the money stays invested, the more dramatically it grows.
Buffett puts it best: “The nature of compound interest is it behaves like a snowball of sticky snow. The trick is to have a very long hill.”
If you’re thinking about how to help your children build a strong financial future, this is one of the most valuable conversations you can start.
As you can see by the numbers, assuming similar levels of returns, longer holding periods can lead to dramatically improved investment outcomes.
As Warren Buffett says: “The nature of compound interest is it behaves like a snowball of sticky snow. The trick is to have a very long hill.”
If you’d like to help your children achieve a strong financial footing, I can’t think of a better conversation to have.
Rick Maggi CFP, Financial Advisor Perth, Westmount Financial