Warren Buffet is no less than a God for the investors around the world. His investment journey dates back to the time when he started trading in stocks at the very young age of 11. By the time he turned 16, he had already made a net worth of $6000 (equivalent of $53,000 today). With a net worth over $70 billion, this 87 year old wealth creator is currently the second richest person in the world, behind his friend Bill Gates.
So, what did Warren Buffet do right to amass such a huge wealth? Here are a few of his key investment strategies from which you can pick up useful tips.
According to Warren Buffet, there is no magical formula or a set of rules that assures fail-safe investment. The only way to invest wisely is to do ample research on the investment instruments, understand their pros & cons, and weigh your options according to your financial goals.
This investment veteran prefers to keep a long-term investment horizon. Building wealth does not happen in a few months or 4-5 years. Rather, it takes at least 10-12 years for the investment to absorb market volatility, beat inflation and generate stable returns.
Warren Buffet says, “Rule #1, never lose money. Rule #2, never forget Rule #1.” This means that you should not run after stocks or an investment option that sound too good to be true and promise too high returns in a short period of time. If you do so, you will not only eventually end up losing money instead of achieving gains, but also will have to start your investment from scratch.
Warren Buffet believes that one of the ways of not losing money is to ensure that the price you are paying against an investment matches the value. So, look for investment opportunities which give more value at a lower price.
One such investment opportunity is lending money online. Also known as peer to peer lending or P2P lending, this option is safe and simple. It helps investors to earn a desired rate of return with an option to minimize the risk by choice.
The investment legend also says that you should not follow the herd mentality and invest only where others are investing. What is more important is to trust your instinct, invest in your ability to analyse the market sentiments and learn all about managing money.
These strategies have made what Warren Buffet is today. Do you think you have it in you to become the next Warren Buffet?