12 Fantastic Things Warren Buffett Says to Do With Money
Warren Buffett, known as the Oracle of Omaha, has been called the greatest investor of our lifetime. The man continues to work into his 90s making great moves upon moves by being strategic and learning from past lessons. There is a lot we can learn from a man that is considered one of the best investors. Here are a few lessons to learn from Warren Buffett To do with your money.
1. Start Investing When Young
Warren Buffett saw opportunities young and started to invest when he was 11 years old. He bought his first stock at age 11, and teaches us that you are never too young to start. The power of compounding interest can help create a snowball effect on your investments. The longer your time horizon the better for your future investments.
2. Invest in Both Value and Growth
Benjamin Graham was famous for introducing Warren Buffett to value investing. Charlie Munger was famous for introducing Buffett to quality companies. Buffett famously said, “It is far better to buy a wonderful company at a fair price, than a fair company at a wonderful price.” It teaches us that instead of looking for needles in the haystack with great value potential, you should look at companies with great fundamentals. Buffett’s largest holding is in Apple. As we can see, Apple is a great company that continues to grow.
3. Having Available Cash
People have often said that “cash is trash,” and if an opportunity comes knocking at your door and you have invested all of your cash, you may not have the funds available to grab a deal. The same goes for emergencies. Having available cash can help you in an emergency and give you the ability to take advantage of opportunities when they arise. Berkshire Hathaway has $20 billion readily available in case an opportunity arises. If inflation happens, a business with a good moat can help survive while others drown in their low margins.
4. Long Term Plan
Buffett said, “Someone is sitting in the shade today because someone planted a tree a long time ago.” The prosperity we may experience in the future can be attributed to the actions and investments we make today. If we plan for the long term, we can shape our future success.
5. Learn About Money
Buffett said in his quote, “Risk comes from not knowing what you’re doing.” Charlie Munger broadens that quote with, “Learn from other people’s mistakes because life is short.” If you want to know more about money, you should read about it, ask questions to wise people, and take notes. It is better to learn from the wise to enable you to make better decisions about your money.
6. Have Patience
Many people find patience challenging, as they want instant gratification. Warren Buffett spent more than 60 years of his life hitting $1 Billion. Buffett says, “The stock market is a device for transferring money from the impatient to the patient.” When markets are volatile, People are often quick to sell and fearful to buy. If you know what you are doing, patience is best.
7. Index Funds Are a Good Strategy
Buffett has talked about “consistently buy an S&P 500 low-cost index fund,” Buffett said in 2017. “Keep buying it through thick and thin and especially through thin.” If you do not know what you are doing with investing, then buying an S&P 500 ETF or index fund could be the best and simplest move you can make. Warren Buffett believes it so much that he owns two S&P 500 ETFs in the Berkshire Hathaway Portfolio. Having a piece of the top 500 companies can be better than looking for a needle in a haystack.
8. Stay Clear Of Unnecessary Debt
One of the biggest life mistakes you could make is getting into significant debt, not like a mortgage debt for buying your house, but credit card debt. Debt with high-interest rates can put you behind the many other people building wealth. Buffett comments, “Stay away from debt as much as possible, especially credit card debt.” Learn to be good with your money and not to overspend.
9. Don’t Lose Money
Many people try to gamble and lose their money on frivolous get-rich schemes. Buffett says the number one rule to money is to never lose it, and the number two rule is to not forget rule 1. This is a good way to look at money—not to be risk averse, but to know where you are putting your money and not gambling it away.
10. Invest in Yourself
Buffett is all about learning and educating yourself on the world. That starts with investing in yourself. Not only should you read books to help create a good foundation for yourself regarding money, but you should also improve your skills. The best investment is the one you put in yourself, whether that be health, education, skills, or just learning about money.
11. Create Good Habits
Good habits are the foundation of a healthy life. If you can become disciplined in doing the smaller things, you can be disciplined in doing great things with your money. Patience, good habits, and discipline can help you succeed in life. Buffett said, “Most behavior is habitual, and they say that the chains of habit are too light to be felt until they are too heavy to be broken.” Create good habits by budgeting money, saving, and investing.
12. Give Generously
Lastly, be generous with your money. Buffett has pledged to give “ More than 99% of my wealth will go to philanthropy during my lifetime or at death.” It takes a great person to give their money away. It is often hard when you think about giving your hard-earned money away. As many have learned, a generous heart can do wonders, and we should be fortunate to create wealth.
Money Lessons From Buffett
Knowing what to do with your money can be hard, especially without much guidance. Warren Buffett has lived for many years and taught people many lessons about money. Take these lessons and learn from them. Apply them to your life as you continue to learn about money.
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