When, at age 95, Warren Buffett stepped down as CEO of Berkshire Hathaway, he had an estimated net worth of roughly $150 billion — a number so large it’s hard to even conceptualize.
Yet Buffett, who officially retired on Dec. 31, has spent decades insisting that the fortune he amassed through the massive holding company he founded wasn’t the result of secret market intel or superhuman stock-picking instincts.
Instead, he has repeatedly pointed to something far more ordinary, and something most people overlook.
“The nature of compound interest is that it behaves like a snowball of sticky snow,” Buffett told shareholders at the company’s annual meeting back in 1999, quoting his vice-chairman Charlie Munger. “And the trick is to have a very long hill, which means either starting very young or living to be very old” (1).
That snowball — compounding — is the “magic trick” that did most of the work, he said.
Compounding isn’t just earning returns on your money. It’s earning returns on your returns. The earlier you start, the longer your “hill” and the more wealth your snowball eventually amasses.
Buffett has emphasized this point across decades of Berkshire Hathaway shareholder letters, often writing that the most significant catalyst for his wealth was not brilliance, but time — specifically, starting as a child and continuing uninterrupted into his 90s.
About 95% of Buffet’s personal wealth accumulated after he was 65, according to an August 2025 analysis in Barron’s, as reported by Entrepreneur (2). Even the most famous value investor of his generation built his fortune slowly.
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Buffett has consistently argued that the average person doesn’t need individual stocks — or the Oracle of Omaha’s legendary skill — to benefit from compounding.
At the 2021 Berkshire annual meeting , Buffett said that for most people, the best thing to do is to own the S&P 500 index fund (3).
That advice is grounded in the long-term track record of the U.S. stock market. The U.S. stock market has historically produced average annual returns of roughly 10% over the long-term — even amid recessions, crashes and corrections.
The timing of when you start matters a great deal. Consider this example:
A 22-year-old investing $10,000, adding $5,000 each year at an 8% return, could end up with about $20 million by age 95 (4). Start just five years later, and the total drops to less than $14 million. Wait until age 32, and the final value will be less than $6 million.
The earlier you start, the more the math works in your favour. Even the best stock picker in the world can’t replicate decades of compounding if they wait too long to begin.
Despite Buffett’s straightforward approach, millions delay investing because:
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They feel they don’t earn enough
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The market seems too risky
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They believe they’ve “missed their chance.”
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They expect to become better investors later
Buffett has long warned that these assumptions lead to worse outcomes than simply starting small and being consistent. He has also cautioned against panic selling, chasing trends, or trying to time the market, all of which can interfere with the compound-interest magic.
His point: You don’t need luck, special access or professional training. You need time and patience.
For everyday Americans, the takeaway isn’t to copy Buffett’s stock picks or his career. It’s to imitate the part that’s available to everyone: Start early, be consistent (perhaps even automating deposits!) and let compounding do the heavy lifting.
Retirement accounts like 401(k)s and IRAs are built for this approach. It offers automatic contributions, tax advantages and low-cost index funds which is exactly the strategy Buffett recommends for non-professional investors.
Despite making one of the largest fortunes in history, Buffett has repeatedly said money isn’t his end goal.
“The money makes very little difference after a moderate level,” he told shareholders. “If you asked me to trade away a very significant percentage of my net worth either for some extra years on my life, or being able to do during those years what I want to do, I’d do it in a second” (5).
Wealth doesn’t require timing the market. Instead, you need to stay in the game long enough for compounding to work its quiet magic.
Even if you’ll never be Buffett, his most straightforward advice is the most powerful: Make your hill as long as possible. Then roll the snowball.
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Warren Buffett Archive (1); Entrepreneur (2); Warren Buffett Archive (3); Compound Interest Calculator (4); CNBC (5)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.