Compound interest: the snowball effect
From our UK edition
Please remember that the value of investments and any income from them can fall and you may not get back the amount invested. Past performance is not a guide to future returns. Companies reinvesting the profits of steady growth over decades are the unsung heroes of the market, according to James Dow joint manager of the Scottish American Investment Company Early in his career Warren Buffett bought shares in the failing textile company Berkshire Hathaway. In 1965 he raised his stake to take control, later transforming it into a legendary investment conglomerate. So why does he now call Berkshire Hathaway ‘the dumbest stock I ever bought’? The answer lies in ‘compounding’.