I just read some articles and videos about Warren Buffet’s Investment strategy.
Compound Interest - He would re-invest the earnings
He would not sell the stocks. He aims long term investment
So, my question is how he is able to re-invest his earnings without selling it. For example, If we buy a stock for 100 and at the end of the year it becomes 150. The earnings of 50 will be reached on our account only if we sold it. So with out selling stocks, how is it able to re-invest the earnings.
Sites say we get around 12% to 20% earnings per year. But how?
If I wanted to start investing via compund interest strategy, what should I do after a year?
by re-investing the earnings means re-investing the dividends you get from the stocks investment. so you do not take the earnings from dividends, you just put it back in the original investment of that particular stock, so this relates to compounding, for more visit this: https://www.fatwallet.com/forums/finance/1275087
He runs the worlds most successful holding company, called Berkshire hathaway. So, as you can imagine, he was never really short of money to invest. His investments are large and the dividends received are ploughed back.
All his investments are super long term. You will experience the effect of compounding only if you invest with such time frame in perspective.