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Moneywiserecently shared his core advice, which consists of three basicrules for investing.
The size of that circle is not very important; knowing its boundaries, however, is vital.
In other words, invest in a company only if you understand how it makes money.
That advice might be more challenging today, with many promising companies doing highly technical, specialized work.
Plus, only a select few people have Buffetts business savvy.
Fortunately, theres an easy way to expand your competence circle: Get advice from a trusted professional.
Start as Early as Possible
People often interpret this advice as start young.
Thats solid advice, but its OK if it doesnt apply to you.
Starting your investment journey at 35, 45 or 55 or later is better than not starting at all.
Compound Interest
The earlier you start, the more time you have for interest to compound.
Compound interest happens when money in aninvestment or savings accountearns interest, which goes back into your account.
By year five, your $1,000 has turned into approximately $1,500 as the interest builds on itself.
By year 20, youll have over $6,000.
Now, say you give that money 40 years to grow.
Contribute to your account consistently, and your money will grow even more.
Find Promising Small Businesses
When Buffett first started investing, he put smaller sums in smaller companies.
Smaller organizations often have more affordable shares and a lower barrier to entry.
The investing world refers to these smaller-scale stocks as small cap, but their potential is big.
But theres also the chance of getting in on the ground floor with a big winner.
Its not a get-rich-quick scheme, Buffett warns.
Gains take time, and the market can be volatile.
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