Six Best Advices From Warren Buffett On Success and Wealth
Warren Buffett is among the richest persons alive having around $87 billion of net worth.
He is famous for his investment skills, but his potential is not limited to stock market investments. One of his best advices to people is continuous learning of new skills and building relationships for ensuring success.
At the age of only 32 years old, Buffett emerged as a millionaire. Currently, he is 87 years of age and is CEO and founder of Berkshire Hathaway. He earned the nickname of “The Oracle of Omaha” because of his refined investment skills in the stock market.
Buffett is an inspirational figure for many people and they want to become rich like him, obviously. People will certainly be happy to get settled against just a fraction of the net worth he has, and luckily for them, Buffett has not kept the secret of getting rich all by himself, and has given some very useful pearls of wisdom about his strategies.
The most notable investments made by Berkshire Hathaway and Buffett have been in stocks rather than bonds on a long-term strategic basis to get the benefit of continuous day trading. But Buffett’s secret of getting rich is not only based on how he made investments.
Following are six best practices to follow, according to Buffett, for people who wish to get rich.
Make Long Term Investments
Buffett suggests that investment in stock should not be made with an intention to sell it in the short term. Rather, it should be kept for long time. According to a shareholder’s letter in 1988, Buffett said that ideally an investment period should be forever.
Buffett invests in stocks he likes and understands completely, as that minimizes risk. He believes that stocks shall not be sold as a strategic move but only when money is required.
Be A Continuous Learner and Stay Humble
Buffett did not only believe in investing advices only for getting rich. He once advised an entrepreneur over drinks that a person should keep on learning new things, seeking and confronting new opportunities, and should always remain humble.
To that affect, in order to learn new things, Buffett reads newspapers and books on a daily basis. According to Buffett, knowledge builds up and works in ways like the compounding impact of interest.
Make Your Own Money Investment
In the annual letter of 2008, while pointing to how value of Berkshire Hathaway had decreased four times, Buffett explained that using loans for investment purpose causes trouble. When value of stocks falls, it results in an undue worry with the investors because the risk factor increases.
On the other hand, if the investor has purchased stock with his own money instead of debt and later the stock value has dropped in the market, then it will not cause undue worry of repaying the loan amount. Investor will be in position of making more aggressive investments because of low stock prices.
Buffett’s advice is not merely limited to the business side, rather he strongly believed that building relationships and treating them well is a key factor for success. He once visited Iowa State and talked to students of MBA about success.
Students were surprised on the personal nature of the advice coming from Buffett. In essence, Buffett believed that relationships cannot be treated with business knowledge and rather require a personal touch.
Consider Future While Making Investment
In 1951, Buffett said that today’s investor does not only benefit from yesterday’s performance of stock.
These words of Buffett still hold true till current period. He advised investors that their focus should not be on past performance only rather future price of stock is dependent on future performance which shall be taken into account when choosing the investment.
High Cost Investment Does Not Equal Quality Service
According to 2017 letter to Shareholders, Buffett emphasized that sometimes wealthy people make investments with investment consultants who have high costs, and thus, waste their money.
People with wealth like to invest in stocks or financial products or services which are high in cost and do not like to invest in funds which are accessible to investors with less money. Buffett strongly believes that small as well as large investors should go for the investment in index stocks that are low in cost, and you would do well to pay heed.
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