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At the age of 9, Warren Buffett learned the secret of becoming rich from a snowflake, which today has made him one of the world's biggest investors. Warren Buffett was asked a question during a meeting in 1999. How can someone make $30 billion dollars if they start today ? The question was very big but Buffett's answer was very short.
The big thing about it is they said start young. But it wasn't just age that was the reason behind this answer. Warren Buffett's entire thinking was hidden behind this. In which the ever-increasing power of time, patience and money was the most important. This story begins when Warren Buffett was just 9 years old.
During a winter day in Nebraska, Warren Buffett made a small ball of snow on his lawn and started rolling it on the ground. As Warren Buffett moved the ball forward, the snow lying on the way got added to it and the ball started getting bigger. This incident related to the life of Warren Buffett is recorded in Alice Roeder 's book The Snowball Warren Buffett and the Business of Life.
At that age, it was just a [musical] snowball experience. This scene later became a great example of Warren Buffett's thinking . Start small, grow steadily, and have enough time to work off that growth. Now think about how a snowball gets bigger? He doesn't grow up in a moment. In the beginning, it's very small.
But as he moves forward, new snow joins him. The next addition of ice sticks to the larger sphere that's already formed . That means every new edge is being built on top of the previous edge. The idea of compounding money is similar. Just for the sake of understanding let's say you have ₹10,000 and an investment gives an average annual return of 10%.
There was a profit of about ₹1000 in the first year. If you take out that profit, the next calculation will be back to the starting amount. But if the profit is allowed to remain at the same amount, the next time the profit is made on an increased amount. Then further profit can be made on that increased money.
This is the basic effect of compounding. Now the real problem arises. The compounding effect doesn't seem very big at first . In the first few years, the increase in money may seem so small that one wonders what is changing at all? This is where a lot of people change their plans. Some withdraw money, some change investments frequently and some take more risks in order to make quick profits.
The result is that the process that needed time is stopped midway. Therefore, in Warren Buffett's thinking, just making profits was not important. Even more important was letting good money work for a long time. Because when the profit is added back to the same amount, the base for the next increase also becomes bigger.
This is why the power of compounding is hidden in the beginning but its impact can be very different in the long run. Now this is where Warren Buffett's 1999 meeting becomes important. At that meeting at Barshah or Hathaway, a guy asked Buffett, "How can I make 30 billion?" Buffett replied, "Start young." He then explained the concept of a very tall hill, comparing it to a cyclone and a snowball.
Warren Buffett's long mountain talk actually refers to time. If the ice ball is rolled only a short distance, its shape will not change much. But if the road is longer, there will be more opportunities for growth. The same thing applies to money. The longer we have the opportunity to continue the right investments [in music] and the right processes, the more time there is for the edge to grow.
But there is an important difference here. Long term does not mean blindly holding on to any investment. If a company or investment is weak, simply holding it for several years will not make it a good investment . To understand Warren Buffett's teachings correctly, it is important to understand the thing first.
Then it is important to understand the risk and then give it enough time. And that's why Warren Buffett's story is n't just a stock market story. A person's earnings can also increase over time if he continues to improve his capabilities. Learned a new skill today, improved it a little tomorrow. Then, with the same art, I got better work and with better work, my income increased.
So today's small efforts can become the foundation for tomorrow's great potential. Here too, the growth doesn't happen overnight but can change over time. Same thing happens with knowledge. Reading a book does not change your life. Even one day's learning does not bring about any major change. But if a person continues to learn over many years , learns from their mistakes, and applies that knowledge to their decisions , their decision-making ability can change over time.
In Warren Buffett's life too, years of knowledge and experience became one of his biggest strengths. Now imagine in 1999 Warren Buffett was asked the $30 billion dollar question . If he wanted to, he could have answered that question in terms of a specific investment or some secret [musical] form. But he talked about the beginning and the time.
This doesn't mean that everyone who starts young will become rich. This means that starting early gives the right process more time to work. In today's world, this has become even more difficult. Every small movement of the market is in front of us. Some news comes in the morning, the price changes in the afternoon and by the evening people start predicting the next big rise or fall.
In such an environment , the most difficult task for an investor is often not choosing investments but sticking to his good plan. This is where Warren Buffett's thinking appears different. His focus is not on the everyday noise but on the real power of a business and investment over the long term. This does not mean that market news should be ignored.
Meaning that it's not necessary to change your big decision by looking at every little movement [of music]. Now let's get back to that snowball. Warren Buffett did n't have a big ball in his hand to begin with. He was young but he found a way to pursue . New snow kept getting added along the way and the shape kept changing.
This picture explains one thing to us. The real benefit of many great things lies not in their beginning but in the long-term process. But this whole story doesn't mean that everyone should just invest and wait. Where is the money being invested? How much risk is being taken? When might I need to withdraw money?
And what is the purpose of the investment? All of these things are important. Compounding is not magic. It is a process and that process needs the right foundation. That's probably the strongest part of the Warren Buffett story . He didn't say there was one secret way to become rich. He showed how important it can be to keep the little things moving in the right direction.
Money can be investing and saving. This experience can happen at work. In knowledge, it can be continuous learning. And now let's return to that question one last time. How to make $30 billion dollars ? Warren Buffett's answer was Start Young. Next came the example of the snowball and the long hill.
The answer was n't a way to get rich quick, but rather a mindset [in music] that considered time to be the greatest power. The biggest lesson of this story is not how to make money like Warren Buffett. The real lesson is to give today's small beginnings enough time to become the great force of tomorrow.
But the direction for it has to be right. Decisions have to be taken thoughtfully and one should not stop midway just because the results appear small in the beginning. Because the most important [musical] thing in Warren Buffett's snowball story may not even be the snow or the snowball. The most important thing was the long route.
That same path allowed the small sphere to grow larger. And the same thing can be understood with money also. The beginnings may be small but given the right direction and enough time, the [musical] outcome can be very different from the beginning. So next time you feel that your savings are small. If your income is low right now or the benefits of your hard work are not visible yet, then remember that old story of Warren Buffett .
Initially the snowball is small. The question is not how big is it today ? The question is, is he moving in the right direction ? Because great wealth is often not made from one big decision. It is made from a long journey of small right decisions. Warren Buffett did n't magically answer the $30 billion dollar question in 1999.
He simply pointed to the start and the time. And that's probably the most direct message [of music] about his snowball thinking.
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