Warren Buffett: 6 Tips on How To Get Rich
Warren Buffett: 6 Tips on How To Get Rich
Cindy Lamothe Thu, December 5, 2024 GOBankingRates
There is some advice that stands the test of time, and that is certainly what we can glean from one of the most successful investors in history — Warren Buffett.
He’s imparted a lot of wisdom over the years when it comes to both money and life in general. Below is a deep dive into some of his best advice when it comes to building wealth and achieving financial success.
Start Investing Young
According to Buffett, the nature of compound interest is that it behaves like a snowball. And the trick is to have a very long hill — which means either starting very young or living to be very old. “If I were getting out of school today and had $10,000 to invest, I’d start by going right through companies,” he said, when it came to researching where to invest.
He recommended focusing on smaller companies that would be working with smaller sums and would likely have more of a chance that something is overlooked.
“You have to buy businesses,” he urged, “or little pieces of businesses called stocks. And you buy them at attractive prices and buy into good businesses.” He said this advice will be the same even 100 years from now.
Be Ready When Opportunity Comes
“The biggest mistakes are the ones that actually don’t show up. They’re mistakes of omission, not commission,” Buffett explained.
In his own life, he noted that he never lost a great deal of money on any one investment. “But it’s the things that I knew enough to do that I didn’t do. We have missed profits of as much as $10 billion that I knew enough to do that I didn’t do.”
He calls these missed opportunities: “There have been other investments where I did know enough to make that decision, and for one reason or another, I didn’t do it or I did it on a small scale.”
Learn the ‘Language of Business’
“If you’re interested in business, I definitely think you ought to learn all the accounting you can by the time you’re in your early 20s,” said Buffett, noting that accounting is the language of business, and you have to know the limitations of that language, as well as all other aspects of it.
He also advises that people work in a number of businesses. “There’s nothing like seeing how a business operates to build your judgment in the future,” he expressed, saying it’s important to understand what kinds of things are very competitive and what things are less competitive.
If you’re interested in investments, Buffett recommends doing a lot of reading. “I would talk business with people who are in business and find out what they think makes their operation tick or any problems and why. I just think you just kind of sop up every place you can.”
Focus on Overlooked Opportunities
“If I were working with a small amount of money, the universe would be huge compared to the universe of possible ideas I work with now,” said Buffett.
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