Best Investment Advice From Warren Buffett | Warren Buffett is a billionaire, legendary investor known as the “Oracle of Omaha”. In investing, he always establishes strict principles for himself. Always following those principles helped him win more and more profits in each trade. Check out these smart investment tips from this genius investor!
1. Never lose money
One of the famous and lifelong investment principles of this legendary investor is probably: “Principle #1: Never lose money. Rule #2: Never forget rule #1. It sounds absurd, but this is considered an investment principle that Buffett has always followed closely after many years. The principal talks about the consequences after the losses, returning to the starting point is extremely difficult, so investors should be careful in decisions that can cause large losses of investment capital.
If you’re not investing, the same rule applies. Never waste your money, when you buy an item, for example, buy it at the most optimal price. Use discount codes, coupons when shopping to save money for yourself. Saving money will help you invest in profitable investments.
2. Portfolio Diversification
Risk management is a key element in investing. One of the best ways to reduce risk is portfolio diversification. Warren Buffett once said, “Never put all your eggs in one basket”. Diversifying your investment portfolio helps you avoid the problem of losing your capital completely, empty-handed when a market fluctuates badly.
In the market, there are always conflicting expectations among investors. Some people think that the market is always right, others think that the market is always wrong. However, the question to ask is what should investors do if their portfolio is performing poorly.
However, portfolio diversification is not always the case. According to investor Andrew Carnegie – Steel King of the US industry in the late 19th century: “The way to become rich is to put all your eggs in one basket and watch that basket.” Focusing on a certain market will help investors easily monitor and be aware of market changes. However, this method is only for professional and experienced investors in the market. Fully understanding the market is a prerequisite for investors to confidently “put their eggs in one basket”.
Therefore, depending on experience and ability, investors should choose the most appropriate investment method. Of course, observing the market is extremely important for a successful investment campaign.
3. Invest in yourself
“The best investment you can make is in yourself.” – Warren Buffett Knowledge is the most important source of capital for you before entering the investment market. The legendary investor once said that he always spends 5-6 hours a day reading books and absorbing knowledge. Knowledge is endless, especially in the investment market that fluctuates every hour and every minute, updating more information daily will help you have more “materials” to make investment decisions.
Investing in yourself is not only in terms of knowledge but also in terms of your brand and skills. These skills can help you increase your human value many times over and of course, this is an asset that no one can tax you.
4. Must know a long-term investment
Warren Buffett is famous for trading high and low in the market. He often assesses the growth of businesses and buys them at a low price, then resells them at a high price. However, in the past, Buffett himself also had a “bloody” lesson when he quickly closed Cities Service Preferred stock, then watched it rise to $200/share.
5. Never invest in what you don’t understand
Many people think that investing is a gamble. The probability of occurrence of risks depends a lot on the calculations and trading methods of investors. Warren Buffett’s supreme rule is that he will never invest in something he doesn’t understand. The fact that he has never invested in technology companies is the most obvious example because he does not understand how they work.
In short, the best method of avoiding risk is to avoid or do not rush to “splash money” on things you do not understand.
6. Don’t follow the crowd
The “herd” mentality appears quite a lot in financial investment. Especially when the market plunges or fluctuates in a bad way, investors often believe in “the people next to them”. This makes decisions more prone to mistakes and causes great losses.
“Fear when others are greedy and greedy when others are fearful.” is advice from the “Oracle of Omaha”. However, here Buffett is referring to the whole market and not to an individual commodity. Do not follow the crowd but stop analyzing the market to make the right investment decision.
7. Believe in yourself
However, the “opposite of the crowd” as mentioned above is not always true. Because investment decisions will depend on many factors including the technical and fundamental analysis, the level of market research of investors.
Warren Buffett is an investor who always trusts his own decisions more than the advice and judgment of others. He is also an investor who often reaps outstanding returns by buying stocks that many people don’t like or don’t appreciate.
Investment is an opportunity to get rich but not everyone can grasp it. Without a correct investment principle, you are very susceptible to fluctuations and wrong decisions. Hopefully the above investment tips from Warren Buffett can help you have a broader view in financial investment in general and commodity investment in particular.