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Buffetts 60-plus-year career has left the personal finance world with some of its favorite quotes and most evergreen advice.
Check it out below,and heres some more too.
He believes this freedom to choose small companies makes small-scale investing powerful.
More importantly, anyone can follow this advice.
you’re able to work smarter, not harder, and learn some investing basics from Buffett himself.
If youre looking for the simplest way to invest,he recommends the index fund.
The Standard & Poors 500 Index is one such example.
The S&P 500 includes 500 companies in various top-performing industries.
Its broad representation means youre not tying your funds to a tiny slice of the economy.
Buffett likes it for everyday investors because its a simple yet effective way to spread your money around.
And the second rule of an investment is dont forget the first rule.
And thats all the rules there are.
Buy Bonds
Put 10% of the cash in short-term government bonds.
If youre looking for investment strategies, why not do what Buffett does with his money?
The U.S. government offers two types of bonds: treasury and savings.
Treasury bonds cost a minimum of $100, while savings bonds cost $25 and up.
Understand Your Investments
Risk comes from not knowing what you are doing.
Knowledge is power when it comes to your money.
You dont need to know everything about the market or the industry youre investing in via websites and apps.
Most people would never be able to invest if that was a requirement.
You do need to understand the basics of how an investment works.
Youve already taken the first step by learning about index funds and bonds.
If you have another investment interest, start researching it.
you’re able to always ask a financial advisor for help if you need it.
The most important quality for an investor is temperament, not intellect.
You need a temperament that neither derives great pleasure from being with the crowd or against the crowd.
Buffett has never made investment decisions by following trends.
Keep Cash Available
When bills come due, only cash is legal tender.
Dont leave home without it.
Buffett believes in his investments but knows the market can be volatile.
In 2008, when its competitors were faltering, Berkshire thrived because it had plenty of access to cash.
One word of caution: CDs tend to charge fees if you withdraw early.
There are always high-yield and traditional savings accounts if you need quick access.
Instead, Buffett told her to pay off her credit cards.
As Buffett explained, credit cards have high interest rates.
Think Value, Not Price
Price is what you pay; value is what you get.
Graham believed in choosing investments based on the target companys value, not the stock price.
Buffett adopted Grahams belief in buying based on a companys worth.
That advice applies to everything from Apple stock to iPhones.
Its not about how much will I pay?
but what will it do for me?
Buffetts appreciation for value extends to a good deal.
The less he can pay for a quality stock, the better.
Quality is still the priority since it isnt a good deal if it doesnt benefit you down the road.
Any bargain hunter can take this advice to heart.
You dont have to buy cheap products to save money.
You only need to find worthwhile products and buy them on sale.
Act on Opportunities
Opportunities come infrequently.
When it rains gold, put out the bucket, not the thimble.
Buffett fans love this quote for a good reason.
These moments are when it rains gold.
When things look good, Buffett scoops up as many great-value stocks as he can.
He still pays attention to stocks with long-term value, but he might spend more on them than usual.
Thats what put out the bucket means.
Go down the road a little bit and find one that says, Capacity: 15,000 pounds.'
The margin of safety is the difference between a stocks sale price and its estimated value.
Thats math you might not do as a beginning investor, but its valuable advice.
Suppose you have $1,000 left each month after paying your bills.
You know investing has a higher potential return than a savings account, but you also know its riskier.
You only have half a months worth of expenses in your savings, so you cant afford that risk.
You put the money in savings to increase your margin of safety.
Buffett gave plenty of good advice in his 2013 shareholder letter, which included six basic rules of investing.
This one is good news for everyday savers and investors.
It means you dont have to keep an eagle eye on stock prices or even check them every day.
You only need to keep a safe cushion and play the long game.
Not sure about the long game, either?
Thats what brokers and advisors are for.
Keep It Simple
You dont need to be an expert for achieve satisfactory investment returns.
Keep things simple and dont swing for the fences.
When promised quick profits, respond with a quick no.'
This final quote encapsulates Buffetts most important advice for beginning investors.
The key is to be the tortoise, not the hare.
Avoid get-rich-quick schemes and trust the markets slow and steady progress.
It worked for Buffett, and thats an excellent endorsement.
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