According to Buffett's investment income statistics from 1965 to 2009, in these 45 years, Buffett's investment income averaged between 10% and 20%, and the income exceeded 50% in only one year. It sounds incredible. How come there are so few? However, the fact is that Buffett used to rely on this level of investment to increase his wealth and become the richest man in the world.
Many people will say that they cannot see such an income level. After all, there are always many income myths that can be multiplied several times. It is really not difficult to double the income in good years. It is difficult to maintain a stable rate of return on long-term investment. Buffett did it, so where is the secret of Buffett's long-term stable income?
Always remember to keep the principal. Buffett suggested that investors have three points: first, keep the principal. Second, we still have to keep the principal. Third, remember the first and second rules. Many investors know this sentence, but it should not be applied to their own investment practice, because inner greed and fear are at work. However, in order to truly obtain long-term sustainable benefits, we must do this well.
Pay attention to long-term compound interest, which is the eighth wonder in the world. Combined with time, compound interest can produce huge income effect.
The principal 10000 yuan, if the annualized rate of return of your investment is 5%, after three years of investment, your return will become 1. 1.6 million yuan, while after 30 years of investment, your return will become 43 1.7 million yuan. If your annualized return on investment can reach 20% and you invest for three years, your return will become 1.70 million yuan.
So we must attach importance to long-term investment and compound interest.