Ritholtz stresses compounding for long-term investment success

Barry Ritholtz, a well-known investor, advises people to appreciate the benefits of compounding when investing. He emphasizes that compounding, or earning interest on both the principal and previous interest, is vital for long-term success. Ritholtz spoke at an event in Miami Beach, highlighting how important it is for younger investors to think long-term. He noted that someone in their 20s, 30s, or 40s has decades ahead to let their investments grow. He said, "My job is just to stay out of the way and not interfere with the magic of compounding." He offered a striking example: an investment of $1,000 in the stock market could grow to over $32 million in 100 years, based on average returns. Ritholtz also mentioned Warren Buffett's success with compounding. Buffett has seen his wealth double in the last eight years. Buffett, who is now 94 years old, started investing at a young age and has built a massive fortune. His company, Berkshire Hathaway, is valued at over $1 trillion and owns various well-known businesses. Ritholtz quoted Buffett’s advice, saying investors should not try to replicate his strategies but rather invest in a broad market index.