Famous investor Warren Buffett has built a fortune worth over $120 billion through his holding company, Berkshire Hathaway, where he has bought businesses and picked winning stocks for decades.
Warren Buffett is widely acknowledged as one of the greatest investors of all time. Known as the “Oracle of Omaha”, Buffett developed his wealth as a value investor, purchasing undervalued stocks with sound fundamentals for a discounted price and then holding them as long-term investments.
As the chairman and CEO of Berkshire Hathaway, Buffett has offered many helpful pieces of advice when it comes to investing. Here are the important finance tips by the most admired finance guru Warren Buffett:
Don’t save what is left after spending; spend what is left after saving
All of us know that saving is important for a better future. But it is alarming to observe that most of us do not even save enough for emergencies. This happens due to our myopic view about personal finance. Instant gratification today matters more than saving for tomorrow. In fact, saving is perceived as sacrifice by people. Set aside money for your future goals as soon as you receive your monthly pay check.
If you buy things you don’t need, you will soon sell things you need
Spending wisely is not being stingy but being smart and aware. Every rupee spent on unnecessary urges contributes to lost wealth. Take the example of the current EMI options on expensive smartphones. When one could do with a Rs 15,000 phone (within budget), the EMI option gives a false sense of smart decision and instead makes you buy a Rs 35,000 phone (overstretched budget).
You will not become rich by living on borrowed money
People initially think that borrowing is manageable. Borrowing should never be done without an objective assessment of future cash flow and other financial needs. One needs to have a solid plan to pay the debt back and not become its lifetime slave. A debt-free life is the best life. Shift to using debit card from credit card. Negotiate your interest rates with the banks and re-finance if necessary.
Someone’s sitting in the shade today because someone planted a tree a long time ago
Money is part of nature, it doesn’t grow overnight. However, we overestimate money we can make in a year and underestimate what we can make in 10 years. You can get benefit only if you invest for long-term and not panic seeing short-term fluctuations. Make a diversified portfolio based on your risk appetite and financial goals. Pick right financial instruments and invest regularly and persistently for the long term.
Investing without knowing increases risk
Everyone wants to make money and we all want it quick. We go for investments which promise high returns. But we fail to objectively analyse the associated higher rate of risk. Trying to hit a six on every ball with your hard-earned money is nothing short of gambling. Consult professional advisors to understand the investment pyramid, develop an investment strategy, review regularly and diversify.
Warren Buffett’s advice on building and preserving wealth is timeless and valuable no matter the size of your family or your estate.
A pioneering company dedicated to promoting excellence in education through innovative solutions and platforms. Edu Expo Global Pvt Ltd unites key figures in Education Technology.