Here are 6 tips from Warren Buffett that seem very easy to follow.
1. Think long term
If you want to invest in individual companies, don’t choose which companies are doing well right now, but consider their potential in the future.
“Nobody buys a farm based on whether they think going to rain next year. They buy it because they think it’s a good investment over 10 or 20 years, ”Buffett told CNBC’s “Squawk Box” in 2018.
Buffett often invests in businesses that he believes they will last long. That’s why he bought See’s Candies and bought shares of Coca-Cola.
“Put together a portfolio of companies whose aggregate earnings march upward over the years, and so also will the portfolio’s market value. If you are willing to own a stock for 10 years, strong even think about owning it for 10 minutes, ”Buffett wrote in his 1996 letter to shareholders.
2. Calm down
Market news can make you stress and panic, leading to hasty decisions. According to Warren Buffett, markets are always volatile, and investors need to be smart and clear.
In a 2018 shareholder letter, he wrote that sometimes the market would get crazy. So what you need to do is to trust the companies you have invested in.
Put simply: “Don’t watch the market closely,” as Buffett told CNBC in 2016 amid wild market fluctuations.
3. Marry the right person
Although he is well-known for his ability in making money, to Warren Buffett, the most important decision he has ever made was to choose his current wife.
You want to associate with people who are the kind of person you’d like to be. You’ll move in that direction,” he said during a 2017 conversation with Bill Gates. “And the most important person by far in that respect is your spouse. I can important overemphasize how important that is.”
His first wife, Susan Buffett, died in 2004, after 30 years of marriage. Then, in 2006, Buffett married Astrid Menks, a longtime friend of him.
4. Invest in yourself
Warren Buffett told Yahoo Finance editor-in-chief Andy Serwer in 2019: “By far the best investment you can make is in yourself.”
In his opinion, first of all, the most necessary is learning how to communicate well, both indirect and direct. Practicing this skill can increase your self-worth by at least 50%.
Next, take care of your physical and mental health, especially when you’re young. Each person only owns one body, one brain, and without good care, by the age of 50, you will be depleted and unable to do anything.
5. Invest in index funds
“I think most people should not choose to buy stocks in isolation. In my opinion, it is best for everyone to buy an American index fund,” Warren Buffett once said at the 2020 shareholder meeting in Omaha, Nebraska.
In other words, the nearly 90-year-old billionaire advised investors to invest in low-cost index funds and keep them for a long time. He recommended buying the S&P 500, an index of 500 of the largest companies in the US, from Google to Disney or ExxonMobil.
Index funds make sense for two reasons: They’re inexpensive and aren’t tied to the success of one single entity.
“The trick is not to pick the right company,” Buffett says. “The trick is to essentially buy all the big companies through the S&P 500 and to do it consistently.”
6. Money is not everything
Warren Buffett has always been one of the richest people in the world. But to him, the most profitable thing is love.
Buffett told MBA students in a 2008 talk: “Being given unconditional love is the greatest benefit you can get.” If you give love, you get it back double.