The most well-known and successful investor of all time, Warren Buffet says these are the things you absolutely must do with your money: (excerpt from Net Worth/Business People)
Here’s The 8 Buffet Points
1.Never lose money
Never work from a loss. Do not lose your money. “If you’re working from a loss, it’s that much harder to get back from where you started, let alone to earn gains.
- Go for high value at a low price
According to a Berkshire Hathaway shareholder letter, Buffet once wrote, “Price is what you pay, value is what you get.”
Losing money happens when you pay a price that doesn’t match the value you get. He said living modestly would enable people to get more value at a lower price. Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down,” wrote Buffet.
- Form healthy money habits
Always have healthy money habits is a mantra that he advocates. In a speech in 2007 at the University of Florida he said, “Most behaviour is habitual, and they say that the chains of habit are too light to be felt until they are too heavy to be broken.” Work on building habits that are positive in relation to money.
4.Avoid any kind of debt, especially credit card debt
Paying interest is to be avoided as far as possible. “I’ve seen more people fail because of liquor and leverage – leverage being borrowed money. You really don’t need leverage in this world much. If you’re smart, you’re going to make a lot of money without borrowing.”
He especially warns against credit cards. “Interest rates are very high on credit cards. Sometimes they are 18%. Sometimes they are 20 percent. If I borrowed money at 18% or 20%, I’d be broke, he said.
- Keep some cash ready
“Cash, though, is to business as oxygen is to an individual: never thought about when it is present, the only thing in mind when it is absent. When the bills come due, only cash is legal tender. Don’t leave home without it.”
6.Invest in yourself
“Invest in as much of yourself as you can. You are your own biggest asset by far. Anything you do to improve your own talents and make yourself more valuable will get paid off in terms of appropriate real purchasing power,” says Buffet.
- Learn all you can about money and investment
The more you know about personal finance, the more security you’ll have as you minimise risks.
- Give back to society
“If you’re in the luckiest 1% of humanity, you owe it to the rest of humanity to think about the other 99%.” Buffet is also a founder of The Giving Pledge together with Bill Gates, it is an organisation where billionaires promise to give their fortunes to charity.
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