Warren Buffett wasn’t born rich. He started small, buying his first stock at just 11 years old. Over the decades, he grew his wealth using two simple principles: Dollar-Cost Averaging (DCA) and compound growth.
What is DCA?
DCA is an easy strategy. You invest a fixed amount of money at regular intervals, no matter what the market is doing. When prices are low, you buy more. When prices are high, you buy less. Over time, this helps balance out the cost of your investments and lowers your risk.
Buffett believed in steady investing. He didn’t try to guess when the market would go up or down. Instead, he kept buying great stocks consistently, even during market crashes.
The Magic of Compound Growth
Compound growth is what makes your money grow faster over time. Let’s say you invest $2,500 and earn a 1.5% return daily. After the first day, your investment grows to $2,537.50. By the second day, your return is calculated on $2,537.50, so it grows to $2,575.56. Over time, this snowball effect becomes even more powerful. After just one month (30 days), your $2,500 could grow to over $3,300, thanks to the compounding effect. The longer you let it grow, the bigger the snowball becomes.
Buffett used this idea to build a fortune. He reinvested his earnings and let compound growth do the hard work. He often said, “The best time to start investing was yesterday. The second-best time is today.”
How Does This Apply to Crypto?
Now, imagine you’re investing in crypto instead of stocks. Crypto markets can be wild, with prices going up and down rapidly. It’s easy to get caught up in the hype and make emotional decisions. This is where DCA can be your best friend.
Let’s say you decide to invest $2500 into Bitcoin every month, no matter the price. Some months, Bitcoin’s price might be high, and you’ll buy less. Other months, the price will be low, and you’ll buy more. Over time, this steady approach helps you avoid big risks and take advantage of market dips.
If you combine DCA with the power of compound growth, your crypto portfolio could grow significantly. For example, with a 1.5% daily compound growth (a realistic target for skilled crypto traders), your $2500 monthly investment could snowball into something big over a few years.
Warren Buffett’s Lesson
Buffett’s success shows that wealth doesn’t happen overnight. It’s about sticking to a plan, staying patient, and letting time work for you. While Buffett doesn’t invest in crypto himself, the same principles apply. Crypto markets are new and exciting, but the strategies of DCA and compound growth are timeless.
If you want to build wealth, start small, stay consistent, and think long-term. Even in crypto, slow and steady can win the race. After all, the biggest fortunes are made by those who are patient and disciplined.
As Buffett says, “Someone is sitting in the shade today because someone planted a tree a long time ago.” Start planting your tree today, whether it’s in stocks, crypto, or any other investment.