I have always been a fan of Warren Buffett and his way of making money. He is one of the greatest investors of all time and owns Berkshire Hathaway.
In 2022, he reached $103 billion in assets. But he is not only a great investor but also a great thinker.
According to a 2012 Time Magazine study, he is one of the most influential people in the world.
Buffett does not hesitate to share his wisdom and experience. Of course, his advice is not just about investing, but about Warren Buffett, who just turned 90.
These amazing insights, which are still valid today, can change your life and help you achieve material and spiritual wealth.
Table of contents
- Making money is important but spending it right matters
- When is the right time to buy
- Making money is a long-term path
- What about saving?
- Making money as a habit
- Becoming better person
Making money is important but spending it right matters
Do not buy things you do not need.
If you buy things you do not need, you will soon have to sell the things you do need.
Of course, basic needs are important. Sometimes socializing is also a necessity. But what about the unnecessary things you take when there is no need or time?
This is where everyone has to objectively take their own stock. People often spend their money to feel better and to get away from painful expenses.
Today, humanity is deathly afraid of boredom. Every year we spend more money to entertain ourselves. It’s getting harder and harder to resist because so many cool things are produced every year.
new phones, new laptops, new cars, new gadgets, new Netflix, and Spotify will make you spend on them.
In the age of technology that pretends you need things you really do not need.
It is useful to realize that you should resist this buying frenzy.
Take your time and really understand the reasons for what you want to buy.
Do you really need a new car? Do you really need a new pair of shoes?
You probably do not really need any of these things. Maybe you are taking all this because you want others to like you more. Whatever you buy, buy cheap.
When is the right time to buy
“I buy it when the price goes down,” Buffett says he learned an important lesson from his mentor Benjamin Graham
Price is what you pay, value is what you get.
This applies not only to the market but also to your life, the situation we are in is valid in every area.
In our society, there is a similar saying in commerce regarding this determination: you deserve it when you buy it.
Do not miss the opportunities! Opportunities rarely present themselves.
When it rains gold, fill your bucket, not your spoon.
You must act quickly and decisively when you see an opportunity.
Declare that it is necessary. When the odds are clearly in your favor – for example, when stock prices are falling sharply – you need to invest heavily because you may not see bargain prices again soon.
Buffett often uses this approach when markets are falling sharply.
He saves a lot of cash when times are good, then invests aggressively when stock prices fall.
He can use this strategy because he has a lot of safe cash.
Making money is a long-term path
Make a long-term effort!
Investing or succeeding in life is a long-term path.
The cliché “Rome was not built in a day”. Rome was built stone by stone.
If you eat the fruit of a tree today and rest in its shade, it is because of the great tree. It is because it was sewn by someone a long time ago.
Achieving continuity in investment or success is a lifelong process and journey. And there are many ways to learn from others before you.
It’s important to benefit from the experiences of others and not make the same mistakes again. Really simple: do not lose.
The rule to becoming successful
- never lose money.
- never forget the first rule.
What Buffett is addressing here may sound a little simplistic, but it is very complex.
As an investor, of course, you are trying to make a profit in the market, but you should not try to avoid harm.
If you eliminate the decisions that expose your portfolio to the risk of losses, you are left with only what you really need
When you have more money in your portfolio, you can increase your returns even faster. This approach has a message about how to invest. Buffett’s words Instead of focusing on the highest gain, you must first avoid losses and hedge them.
That means looking at profits only when you have them. We have a different perspective from investors who view the stock market as a slot machine.
What about saving?
Make saving a habit! Do not save what is left after you spend it, spend what is left after you put your savings back. This is one of the most common mistakes.
Most people are first spending and what is left of their salary, they transferred to savings. NO!
Pay yourself first and automate it if possible. Be cowardly when others are greedy and greedy when others are fearful.
While some investors believe that investing is about numbers, Buffett believes that investing has more to do with investor behavior.
When investors are greedy and stock prices skyrocket, Buffett is scared because a market decline is likely.
In the opposite case, when investors pull out of the market or a particular stock, Buffett becomes more interested because prices are more favorable.
When stocks are cheaper, they do not have the risk they do when they are expensive.
In this way, Buffett manages to avoid losses. As you know, the Coronavirus hit all world markets.
Stock prices fell very quickly due to concerns.
However, some investors dived into the market and bought in the middle of this climate of fear. Those who manage to buy in fear and confidence in their companies, perhaps in history.
They were able to multiply their returns in an unprecedented way in a very short time.
Making money a habit
Habits are not built in a day. But once you gain them, it’s very difficult to let them go. The same is true for good investments.
You do not become a good investor in a day. if you do not have the patience, it takes months, maybe even years.
But once you make it, it’s very hard to let it go. acquire useful habits and then wait for the opportunities that come our way.
The difference between great businesses and ordinary businesses! Getting a great company at a fair price means getting a great company at a great price.
While some value investors focus on buying only the cheapest companies, Buffett suggests a better way: The more competitive, the better the companies he buys.
But there’s a problem here: reasonably, small companies can come to market cheaply more often, while large companies rarely do.
A company with a good competitive advantage, even if you buy it at a very high price, is likely to continue to make money over time and not disappoint you.
But it’s a situation that is constantly shaking out and may not be at your cost or beyond.
This may not be true for an ordinary business.
Becoming better person
Make friends with people who are in a better position than you. The environment is the name of the game. And the best part is that it is 100% in our own hands.
“You are the average of your 5 closest friends”.
“Try to hang out with people who are better than you”
Choose your co-workers from those whose behavior is better than yours.
Over time, you will find that you are similar to them.
Remember The person you will be in 5 years depends on the books you read today, the movies you watch, the series on TV, the people you spend time with, the foods you consume, and your habits.
Want to learn more about building wealth? check my other post “Wealth – What are the 5 different levels?” or How to master trading psychology, Stock Investing Strategies.
also read about Buffett Indicator Explained