
Buffett says that compounding interest is one of the main reasons he is where he is today. In our Chart of the Week, we look at his journey in detail. From his first $120 saved from selling packs of gum and coca colas in 1942 to his $72 billion today.
(Click to enlarge all graphs)

But that chart hides a lot of fun information from Buffett’s early life until the mid 70’s, so below is that chart broken up into several periods:
Buffett’s First Million 1949 – 1962

Some notable events/milestones in Buffett’s early years
Most of these values and quotes come from Buffett’s autobiography The Snowball: Warren Buffett and the Business of Life
- 1942 (age 12): $120 in savings.
Buffett is constantly looking at ways to make money even at a young age.
“My grandfather liked the idea that I was always thinking of ways to make money. I used to go around the neighborhood collecting wastepaper and magazines to sell for scrap….where you would get 35 cents for a hundred pounds, or something like that.”
- 1944 (age 14): $2,000 in savings – mostly from delivering newspapers. Buffett filed his first income tax return and paid $7 in taxes after deducting the cost for his bike and wristwatch.
- 1946 (age 16) $5,000 in savings – from newspapers, selling used golfballs and owning several pinball machines.
- 1949 (age 19): Buffett enters Columbia Business School with $9,800 in savings
- 1956 (age 26):
“I had about $174,000, and I was going to retire. I rented a house at 5202 Underwood in Omaha for $175 a month. We’d live on $12,000 per year. My capital would grow.”
His “retirement” plan? Starting an investing partnership on May 1, 1956. His partnership would of course be extremely successful, and by 1962 (age 32) Buffett becomes a millionaire.
Buffett’s First Billion 1962-1985

Now the compounding machines goes to work. Buffett reinvests all earnings back into his partnership and averages returns over 20% per year. Here Buffett becomes much more well-known across the business world.
I won’t go into a ton of detail in this part of his life, as most of Buffett’s life from 1965 on is well documented. If you want to read more, check out his autobiography, The Snowball, seriously it’s awesome! (And it is $2.50 used on amazon right now as I type this!)
In 1965 he takes control of Berkshire Hathaway, by 1970 he has dissolved his investment partnership and become chairman and CEO of Berkshire Hathaway. Berkshire Hathaway would average over 21% return from the day he took over until today.
But it was not smooth sailing, 1974’s bear market cut Buffett’s net worth nearly in half. 1975 brought about an investigation by the SEC and 1976 saw a huge strike at Washington Post Company, his largest holding at the time.
But he stuck to his guns, and was heavily rewarded. Look at how his net worth goes parabolic from the mid-seventies until 1985, when he first becomes a billionaire.

Now, in more modern times, he have very detailed history of Buffett’s net worth. In 1982 Forbes magazine began publishing their annual “400” list– the 400 richest people in the world, and Buffett was in it every year.
- 1982 – Buffett is worth a quarter of a billion dollars.
- 1987 – The crash in 1987 causes Buffett $342 million in losses in one day.
- 1993 – For the first time, Buffett is the richest man in the world – with a wealth of $8.3 billion.
- 1995 – Buffett crosses the $10 billion mark for the first time.
Today, Fortune magazine has Buffett’s worth at about $72 billion. From $9,800 in 1949 to $72 billion today! An annual compounded return of about 27% a year!
If that is not a testament to the powers of compounding interest (combined with a long term investing time frame) – I don’t know what is.