How much is your $1000 worth in the future?

How much is your $1000 worth in the future? Is it still going to be $1000 or to the more financially savvy who are aware of the eroding effects of inflation, less? To those who aren’t aware of what inflation is, simply put, it is what makes your $2 chicken rice today $3 a few years down the road. (Read more: Investopedia | What is Inflation?)

But no, we don’t intend to go on about what inflation is and how it quietly erodes the value of your money. Rather, we want to do something bigger than just talk about inflation. We want to expose and hopefully mould your thinking into the way Warren Buffett thinks.

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To Warren Buffet, $1000 today could end up as $1,000,000 some time in the future thanks to investing and componding! $18,261,630 to be exact.

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Taken from Berkshire Hathaway 2014 Annual Report

To those who have read some of Warren Buffett’s books like The Snowball: Warren Buffett and the Business of Life, you would have noticed a startling fact that, Warren Buffett, rich as he is, is especially stingy with his money even when it involves his family members. When his sister Doris ended up owing a few million dollars in the wake of the 1987 stock market crash (she had been playing around with derivatives), Buffett refused to clear her debts. Of course, he had his reason for not wanting to clear her debts, but it goes to show how Warren Buffett thinks about his money and the potential of it that so many of us fail to see!

The key takeaway here is to expand your thinking about what that sum of money, be it a paltry sum or a sizeable sum, can become in the future. Though it may be $1000, but instead of seeing it as just $1000 or even less, start seeing it as a seed that can potentially become a million some day. Far-fetched as it may be, but we hope to offer you a paradigm shift towards your thinking about the money you have in your hands today.

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Do not despise your humble beginnings! Remember, even Warren Buffett himself started small. When he was just 11 years old, Warren Buffett pooled his savings with his sister Doris and bought six shares of oil company Cities Service (now called Citgo) at $38 per share. This represents $228. With only $228, he went for it anyway. Imagine if he had waited until he saved up $1000, he would probably wait a little more to save up till $5000, then $10,000. So on and so forth that he never got started at all. Though Warren Buffett did not make money immediately, that first investment was what made him his billions today. Do a self-inventory and ask yourself what is stopping you. Write it down, and question the reasons you list out, if such fears are unfound or not.

Aloysius Lee

Aloysius has been investing in Singapore Equities from the age of 18 and is still madly enthusiastic about it. He strives to sharpen his edge while guiding others along the way to snowball their way to financial freedom!

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