The oracle of Omaha, Warren Buffett, a huge business magnate at 92 with a net worth of 97.5 billion dollars, has a long list of accomplishments. However, Buffett was just an ordinary man at his early stage in life until he reinvested his earnings and, in the process, rose to the position of one of the most successful investors the world has ever produced. He lists ten secrets that helped him and how individuals can adopt the same traits and become successful.
Read up to the end on the secrets of how to get rich by Warren Buffett and enjoy a bonus tip.
Here Are the Top Secrets Of How To Get Rich By Warren Buffett
Keep Control Of Your Time
Keeping control of your time is one of the secrets of getting rich. However, you can only achieve this if you allow people to set your agenda in life. One thing is sure, and that is we have many distractions in the world we live in, and unfortunately, the sad thing about distractions is that they have no profit or value to our lives. Social media, for example, has become a significant distraction. You often scroll on your phone for hours without any important reason, and in the end, you will discover that you have wasted a lot of time you would have invested in. Therefore, you must say no to all distractions if you genuinely want to make something out of your time.
Hang Out With Successful People
To be successful as an investor, you need to look at your surroundings for inspiration. Also, surround yourself with associates and individuals with exemplary behaviour who are much more successful than you. This is because whoever we associate with will always determine how far we go. That is why it is good to choose wisely when associating with people. If we associate with the ones who do not take life seriously, we will soon start replicating the traits and vice versa.
The Chains Of Habit
According to Warren, ” the chains of habit are too light to be felt until they are too heavy to be broken”. Therefore, as young people, it is essential to take a look at those habits that are not positive and ensure that they are cut off from the root before they become intolerable. To become a productive human being, good habits must be an instrumental part of your character and whenever you find out that those old bad habits are trying to spring up again, try everything to crush them. Unfortunately, many teenagers and young adults have been caught in the web of destructive behavioural patterns at their early childhood stage, which might become very hard to change in the long run unless something is done very early. However, some might not have an obvious devastating effect on you. However, habits such as lateness and disorganization can derail your path to greatness.
Never Lose Money
Another of Warren Buffett secrets of how to get rich is to never lose money. Warren advocates that capital preservation should be the most important priority when choosing where to put your money in the market. We spend more on frivolous things when we should have spent it on something important. Warren is particular that we need to invest our money in a way that it will replicate itself in the future.
Risk Comes From Not Knowing What You Are Doing
Warren believes that even a little research can significantly lower the danger. Warren relies on every detail when it comes to investing and encourages investors to study and keep studying. Nevertheless, it is easy to forget this advice, especially once an investor has become a little successful. As investors, one of the inherent dangers is that a positive feedback loop can be deceptive and even dangerous. Instead, Warren suggests it is safer to keep doing homework as an investor. A thorough study of a project or investment will save investors from long-term losses. Before choosing any path, you want to thread in investing and daily life, sit and critically study it.
Build On A Long Term Investment
“Someone is sitting in the shade today because someone planted a tree a long time ago”. This quote is a cornerstone of Warren”s philosophy for long-term investment. According to him, investing in your future is still early enough. You can start today, and like a tree takes time to grow, you need lots of patience to nurture your investment and allow your money to grow. According to Warren, one key to growth in life is patience, and this does not only focus on investment alone but other aspects of our lives because taking a shortcut is a road that leads to nowhere when it comes to life. Hard work has a more rewarding ending than quick fixes, game-playing, or taking shortcuts.
The Most Important Quality Of An Investor Is Temperament, Not Intellect
Warren is of the school of thought that disciplined investors understand it is common to have market swings and that only persistence will surely pay off. This is the main reason why these people can become wealthy investors. Warren questions that many deals are lost because of investors’ bad temper, and that is to establish that sometimes, the psychological route can be the reason for failed investments. Although humans, by nature, are irrational creatures and are prone to surrendering to temptations to trade when they believe the market is against them.
Warren says that becoming disciplined with your response to the market’s irrationality is the key to increasing your wealth. Therefore, wise people and investors avoid irrational reactions to the market’s volatility. Rather, they calmly play the long game, analysing the market with a level head to eventually grow their wealth. This also applies to our daily lives; we should always consider thinking rationally and logically instead of being emotional about decisions.
The Most Important Investments You Can Make Is In Yourself
Your ability to generate income and the ability to make the income work for you are two you should continually invest in. Warren sees that investing in yourself in terms of educating yourself about innovative investment ideas should be taken as important. He advises that whatever you do, always strive to improve yourself to command a higher price and earn more money. For Warren, one is sacrosanct; the cash will never go out of date. He wants everyone to be the best version of themselves, which can only be achieved by educating oneself.
That means spending more on financial literacy, which could be done by attending seminars, webinars, one-on-one coaching with financial experts, value-adding intensive courses, and getting information from other trustworthy financial sources. This will make your investment games more robust and reliable, help you think outside the box and serve as a defence in hard times.
If You Aren’t Willing To Own A Stock For Ten Years, Don’t Even Think About Owning It For Ten Minutes
Warren is trying to provide insight into his strategy for investment. It is the clearest insight into Warren’s strategy for approaching the active versus passive investment game plan. Warren advises that if you want genuine returns, you must choose your assets carefully, and also, you must be prepared to stick to them for the long term. This claim further solidifies the long passive investor plan like Jack Bogle, who founded the Vanguard group. In this phrase, Warren clearly contrasts the emotional nature of day’s traders who prefer to trawl the markets to seek temporary aberrations with long-term investors who focus on the gain in the future.
Based on Warren’s opinion, a wise investor should consider the strengths and shortcomings of a stock. Apart from that, he should also consider the company’s potential for long-term success, which means it is important to consider whether the company is worth investing in based on its long-term viability instead of its current performance. For instance, Warren spent over one billion dollars on Coca-Cola shares in 1988, which turned out to be a wise investment. Till today he still holds those shares, and the portfolio has an estimated worth of 23 billion dollars. Also, in 1972, he bought Seas Candies with his long-standing business colleague, Charles Munger, and it is interesting to know that today, Warren still owns both assets.
Don’t Pass Up Something Attractive Today Because You Think You Will Find Something Better Tomorrow
A popular saying goes thus” a bird on hand is worth two in the bush” This goes with Warren’s beliefs regarding investing. He says it is a bad idea to forget a profitable investment so that you can make a better one later. The risk is that even the most knowledgeable Investors can not predict what the market will look like tomorrow. There might not be another stock like the profitable one you passed on today might be the next great innovator. Therefore, Warren opines that it makes little sense to sell a crucial stock to you, hoping that a better and more profitable one might appear.
Keep A Record Of Your Past Failures And Learn From Them
Let go of the past, especially if the past is not a good one. However, it helps when records of the failures are kept. This will enable you as an Investor to avoid some pitfalls that might be on your way next time. Also, it will help to widen your knowledge and horizon and pattern your way to making better decisions in subsequent times.
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Recommended books for further reading:
- Rich Dad’s Guide to Investing: What the Rich Invest in, That the Poor and the Middle Class Do Not!
- Smarter Investing: Simpler Decisions for Better Results
- How to Day Trade for a Living: A Beginner’s Guide to Trading Tools and Tactics, Money Management, Discipline and Trading Psychology
- The Barefoot Investor: The Only Money Guide You’ll Ever Need
- Investing QuickStart Guide: The Simplified Beginner’s Guide to Successfully Navigating the Stock Market, Growing Your Wealth & Creating a Secure Financial Future
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Excellent tips for investing and creating wealth