There are a million ways to make a million dollars. But this is how to get rich the Warren Buffet way.
The main character in this video is the legendary Warren Buffet, who made his fortune of over $104 billion by investing in the stock market.
And after decades of being successful, this is how you make money, according to him.
Don’t worry if you don’t feel like reading, you can enjoy the video below or watch it on YouTube:
1
First lesson from Warren Buffet – Make your first investment as early as possible
Warren Buffet says this in almost every interview he gives, and there’s a reason for it. It’s just very strong.
If you start investing as soon as possible, you’ll be ahead of 97% of other people.
This is possible because of compound interest, which people on Wall Street call the “8th wonder of the world.”
This isn’t something you learn in school. This is Warren Buffet rich advice.
When you invest in your youth, the only downside is that you can’t spend your hard-earned money on loans.
But once you understand how compound interest works, you’ll see why it’s better to start early.
2
The second lesson from Warren Buffet – You probably did this with your first $100.
Checking the price every hour or, in extreme cases, every few minutes to see if they made any money. That’s not how Warren Buffet got rich.
If you’re not sure about your investments, maybe you shouldn’t have made them.
Good purchases don’t require constant maintenance. Over long periods of time, they do the hard work for you.
It’s all about getting the basics right.
And that’s exactly what Buffet is effective in, which is why 80% of Berkshire Hathaway’s portfolio is made up of just a few companies that they have owned for years or even decades.
And if you want to know why this might happen to you when you buy, there are two reasons:
You are playing the short-term game, which Buffet says is a loser’s game, or you are not emotionally or mentally ready to hold on to your investment.
3
Don’t get hung up on trying to make an economic analysis
To make the most money, you might be tempted to try to pick the bottom and the top.
But that only shows one thing: you don’t know how things work in the big picture.
What’s going on in the world economy has a big effect on the stock market.
Technology, politics, new ideas, and problems with the supply chain all play a role.
Things we can’t predict have a big impact on the world economy.
This includes pandemics, wars, problems with the supply chain, and ships getting stuck in canals.
And only a fool will tell you that you can know everything about these things.
The only way to stay cool during a storm is to know that it will end at some point.
Warren Buffet has lived long enough to have seen 14 presidents, 7 wars, and a lot of other terrible macro events. Even experienced investors like him can’t make such judgments.
In his whole life, he only put his money on one thing: that the U.S. will win, and as long as that stays true, his investments will be profitable.
He knows that trying to predict these kinds of things and make an economic study based on them will only take him away from his long-term goals.
4
Invest in index funds and never look at a headline
Warren Buffet says that you shouldn’t be moved by the ups and downs that you hear about in the news every day.
It’s just noise.
The job of the media is to make shocking stories to get you to click or watch.
They don’t exist to help you get rich.
There’s no reason to make the game harder because it’s already hard.
In fact, you should make it as simple as you can. Here’s the secret Warren Buffet rich way:
He doesn’t try to beat the market or buy one stock just because.
Buffet is very cautious and only invests in index funds.
He is putting his money into the stock market as a whole and taking advantage of its long-term trend to go up.
Even more so, he has even told the public that he has told the person in charge of his estate to put 90% of his money into an S&P 500 index fund when he dies.
Buffet thinks that American businesses will do well in the long run. Something many people have started to question recently.
As a bonus, there are a lot of people who can change the markets just by writing on social media sites.
The easier it is for whales to move the price of a stock in their favor, the smaller a company’s market cap is.
Getting back to the idea of low upkeep, an index fund like the S&P 500 can’t be moved as easily because it has a crazy high market cap and is made up of many different stocks.
Veterans who have traded in this index for decades are more likely to know this than most people.
5
Take it from Warren Buffet – By far the best investment you can make is in yourself
Warren Buffet has always said that investing in yourself is the best thing you can do.
He thinks that the more skills and information you have, the more useful you are.
Investing in yourself pays off in the long run, whether you do it by taking classes, reading books, learning new skills, or making good habits.
No one can take these things away from you. Also, don’t forget that good health is money.
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6
Don’t make investments unless you are psychologically prepared to hold them for extended periods of time
People undervalue patience.
In order to make money, you have to be patient and give up the idea of getting money.
It doesn’t make sense, which is why so many people find it hard to understand.
But if you focus on making money, you lose sight of what makes you money in the first place.
Just like a farmer wouldn’t plant seeds and then dig them up the next day to see how they’re doing, investors shouldn’t check or change their investments too often.
In the short term, the stock market is unpredictable. But in the long term, it has always gone up.
Buffet is a strong believer in the “buy and hold” rule.
He is known for keeping his investments for many years, which has helped him become so rich.
This takes a certain amount of mental toughness and an eye for the long term.
It means not getting scared when the market goes down and not selling.
7
Just because you can trade does not mean you should
Investing has never been easier, and whether you like or dislike mutual funds, Platforms like Robinhood, for example, have made it possible for anyone to buy and sell stocks.
But at the same time, this led to the Wall Street Bets and YOLO culture, which is more about quick gratification than investment.
They urge people to trade, try to get rich quickly and act recklessly.
But just because you can trade, doesn’t mean you should.
Even experienced investors like Buffet tell you not to do it.
That’s because buying and selling a lot, looking for the hottest stock, or trying to time the market rarely leads to long-term wealth.
It actually makes people make bad decisions because of things like fear and greed.
And fear and greed will bring you less money, not more. If you want to become Warren Buffet rich, fead and greed is not the way.
Investing and feeling are like oil and water. They don’t mix. They just don’t go together.
Remember that the stock market can be used to make money or to move money from anxious people to patient people.
8
Know the difference between investing and speculating
Buffet says that investing means putting money into a company with a strong business plan and good financials, with the hope that the money will grow over time.
Simple but practical.
On the other hand, speculating means putting money into an object with the hope that its price will rise quickly.
It’s more akin to gaming.
Buffet says that people shouldn’t speculate because it doesn’t lead to long-term income.
There are always more chances for short-term gains.
And there will always be a bigger fish waiting to eat those who don’t want to learn.
There is no way to get rich quickly. Someone else is just getting rich off of you.
9
Looking at the price is not investing
Buffet once famously said: “Price is what you pay. Value is what you get.”
Investing is not just about getting cheap stocks.
It means buying stocks that are priced too low. Big difference!
It means looking for companies that are worth more than what they are selling for on the market.
And to find these companies, you have to look into their finances. Moreover, understand their business models, and evaluate their leadership and competitive edge.
Again, it’s important not to let price changes or the mood of the market sway you. This is how you keep rich according to Warren Buffet.
So, if you really want to invest and don’t want to depend on a third party like an asset management fund to do it for you, you need to learn about finance.
You’re in luck because we have a lot of articles on this topic, so once you’re done with this one, be sure to check out the others.
10
When stocks go down, it’s good news
Even though it might seem strange, Buffet says that a drop in stock prices is not a bad thing.
It’s a chance to save money while buying more of a company you believe in.
Imagine that your favorite thing at the store is on sale. You’d be happy, right?
So why shouldn’t it be the same with stocks?
Don’t forget that saving is for the long run.
Price changes every day or even every year don’t mean much in the big picture.
You should worry about the long-term trend of going up.
And sometimes to do that, you have to be different and go against the crowd.
Remember that “blood on the streets” is a metaphor for making real money.
If you don’t, you’ll be taking money away from people who bought when others were scared.
If you want to build wealth that will last for generations, you need to learn to control your feelings.
So here you have it, the recipe to get rich according to Warren Buffet. Now you know how, so start doing.
