Compounding is very difficult for human minds to comprehend.
As the famous riddle goes:
“Imagine it’s 10:00 AM on a small pond with a single lily pad. If the number of lily pads on the pond doubles every minute, and the entire pond is full of lily pads by 11:00 AM, at what time is the pond half full of lily pads?“
Morgen Housel brings this up in his conversation with Tim Ferriss (worth a full listen) when he talks about Warren Buffett who’s real talent, when compared to other greats like Jim Simons, was not the level of investment returns (Simons’ are much higher) but their longevity. As he says “if Buffett had retired at age 60, like a normal person might, no one would’ve ever heard of him” (transcript).
