Chris Davis once asked his grandfather to buy him lunch. Grandpa said no and told him how he could turn the missed lunch into $1,000.
It’s no secret that a dollar today isn’t worth the same as a dollar 30 years from now. Year by year, inflation eats away at that dollar in your piggy bank. The good news is that smart investing more than makes up for inflation’s effects.
Chris Davis, chairman and portfolio manager of Davis Advisors, learned the lesson at a young age. In a recent interview with Barron’s, Davis recalled a time he skipped lunch to attend a meeting with his grandfather and afterwards asked for a dollar to buy a hot dog. The grandfather explained that Davis could spend a dollar on the hot dog now, or he could watch it grow to be worth $1,000 by the time he reached his golden years.
“I actually went back and did the calculation, and he was just about exactly right,” Davis says. (We did our own math and $1 invested at an admittedly aggressive 12% amounts to $1,005 after 61 years.)