Warren Buffett's Most Indispensable Financial Advice
We all know that Warren Buffett is one of the world's richest men. The CEO of Berkshire-Hathaway, one of the world's largest holding companies that originally began as a textile company in 1839, Buffett graduated from Columbia Business School at Columbia University and is widely viewed as one of the world's foremost financial and investment experts.
So, if you're looking for some financial advice, why not take it from one of the world's richest men?
Here are 10 tips for financial success from Warren Buffett.
Never Lose Money And Never Forget To Never Lose Money
Translated, Buffett's advice is to carefully guard investments that are making you money by avoiding financial moves that lose you money. That's because it's very easy to keep losing once you've started, but getting that money back is nigh-on impossible.
It's Better To Buy A Wonderful Company At A Fair Price, Than A Fair Company At A Wonderful Price
Another piece of salient advice on investing in the right companies at the right time. "Wonderful" companies, in Buffett's eyes, weren't just companies with laudable goals, rather, companies that hold better competitive advantages than that of your competitors—who are likely all out buying the "cheapest" companies they can find.
Opportunities Come Infrequently. When It Rains Gold Pull Out The Bucket, Not The Thimble
In other words, quick and decisive investments are necessary for financial success. Here, "Pulling out the bucket" refers to buying when stock prices are low, having confidence that they'll come back up and that you'll make a bunch of money.
We Simply Attempt To Be Fearful When Others Are Greedy And To Be Greedy Only When Others Are Fearful
Another bit about avoiding loss.
Buffett suggests that when other investors are being greedy and buying everything under the sun, that might be the time to hold off, rather than follow the crowd. Instead, buy when stocks are cheaper and have less risk associated with purchasing them.
The Most Important Quality For An Investor Is Temperament, Not Intellect
You can be the smartest person in the stock exchange, but if you don't have the temperament to analyze what's best for you, rather than what everyone else is doing and following the crowd, you could end up losing big. Focus on the objective facts and make decisions without emotion, allowing you to make better investment decisions.
The Stock Market Is A No-Called Strike Game
The full quote is "The stock market is a no-called strike game. You don't have to swing at everything, you can wait for your pitch". It's one of Buffett's most salient and famous pieces of advice.
It's all about having the patience to wait for the right investment opportunity, which is how you really make money.
If You Like Spending Six To Eight Hours A Week On Investments, Do It
His full quote is: "If you like spending six to eight hours a week on investments, do it. If you don't, then dollar-cost averages into index funds". Rather than buying individual stocks, you should join the professionals and buy an index fund based on large collections of stock indexes, such as the S&P 500. If other pros are doing it, there's a good chance that's where the sound investment lies.
You Don't Get Paid For Activity, You Get Paid For Being Right
Buffett's advice here is to remember that you don't get paid by how many stocks you trade back and forth, scrambling around trying to find the winning combination. Patience is a virtue and you can make the biggest payday by investing correctly at the right time.
Everyone Would Be Better Off With An Investment Punch Card
"At the business school, I tell them that they would be better off if they got out of school, somebody gave them a card with 20 punches on it and every time someone made an investment, they used up a punch". Buffett's full quote here is all about making the right investments at the right time. If you only had a limited number of investments to make in your lifetime, you'd be more careful about what you invested in and when.
After All, You Only Find Out Who Is Swimming Naked When The Tide Goes Out
A final piece of advice from Warren Buffett is to shore up your portfolio, so that you can outlast the storms within the market. Buffett's advice reminds us that only when things get tough do those with a diverse enough portfolio survive. Ensure that your investment portfolio is large enough to ride out the downturns in the market.
Let us know which of Buffett's advice you agree with and which you've employed in your financial life with success.
