One of the most powerful forces in investing isn’t skill, intelligence, or even luck.
It’s time.
Warren Buffett is worth over $120 billion. He’s brilliant, yes. But he’s also 95 years old. Here’s what most people don’t know:
96% of his wealth was generated after he turned 60.
The lesson? The magic isn’t just in being smart with money — it’s in giving it time to compound.
The sleep study principle
Think about conducting a sleep study or continuous cardiac monitoring. You don’t just watch the patient for an hour and call it done. You monitor overnight — sometimes for days — because the event you’re looking for might happen at 3am on night two.
If you disconnect early because “nothing’s happening,” you miss the diagnosis entirely.
The share market works the same way.
The cost of missing the best days
Here’s a startling piece of research: In any given year, the majority of the market’s returns come from just a handful of days. Miss those days, and your returns plummet.
For example, if you were invested in the S&P 500 from 2003 to 2023:
• Staying invested the whole time: ~10% average annual return
• Missing the 10 best days: ~5% return
• Missing the 30 best days: negative returns
The problem? Those best days are impossible to predict. They often happen during volatile periods, right after big drops, when everyone’s panicking and thinks things will get worse.
If you’re in and out of the market trying to “time it right,” you will almost certainly miss the days that matter most. It’s like disconnecting the EEG monitor right before the seizure.
Compounding needs time to work
Here’s what time does to your money:
Starting with $100,000 at age 30, no additional contributions, 6.5% growth:
• Age 40 (10 years): $187,714
• Age 50 (20 years): $352,364
• Age 55 (25 years): $476,098
• Age 60 (30 years): $643,339
• Age 65 (35 years): $869,358
Those final 10 years generate almost half the total wealth.
That’s compounding in action. You’re not just earning returns — you’re earning returns on your returns on your returns.
But this only works if you stay invested.
Why “locked in” might actually be a feature, not a bug
KiwiSaver gets criticized for locking your money away until 65. But maybe that’s actually doing you a favour.
Remember behavioural risk from our previous post? One of the biggest risks in investing is you — making emotional decisions at the wrong time.
Being locked in stops you from:
- Panic-selling during market drops
- Pulling money out to chase the latest property scheme
- “Just quickly” using it for something that feels urgent today but won’t matter in 30 years
Inaccessibility protects you from disrupting compounding. And compounding is the most powerful force in wealth building.
The bottom line
Time in the market beats timing the market — every time.
The best days are unpredictable. Compounding takes decades to really shine. And your biggest enemy isn’t market risk — it’s the temptation to interfere.
Stay invested. Stay the course. Let time do its thing.
This is educational information about investment principles — not personal financial advice