Warren Buffet is a known person to everyone. Warren Buffet is a veteran American investor and 4th richest person in 2020.
Warren buffet net worth: $70.80 Billion
Designation: Chairman&CEO of Berkshire Hathway
Warren Buffet paid his first tax at the age of 14 (1944). According to the reports he paid $7 in taxes $592.50 of income in1944.
In recent times, everyone has been trying to copy the Warren buffet but most of the investors have failed.
When we see Warren Buffet we always admire him but we can’t follow his principles.
In this article, we are discussing 7 things we should do in a Warren Buffet way.
7 Things You Should Do In A Warren Buffet Way
Patience is key to success
Think about the long term
Compounding of investments
Invest before you spend
Invest in business, not in speculation
Don’t borrow money to buy stocks
No to IPO(Initial Public Offer)
Patience Is The Key
Warren Buffet started his investment journey at the age of 12. He became a millionaire at the age of 30. It takes almost 20 years to become a millionaire. He became a billionaire at the age of ’50s.
Here’s why we should always be patient. He lost his Money most of the time in the stock market crash, but he believes patience is the key.
“The stock market always returns to an investor who has the patience to hold their investment”
Think About The Long Term
Short term investing is for our living but long term investing is for our wealth. In our day to day life, we have a lot of expenses like rent, food, entertainment, etc,.
For these expenses, we need to invest in the short term only. When we want to become rich, we build our long term portfolio.
Warren buffet bought coca-cola shares in 1988 and he held the stock till today. Buffett has remarked that American Express is one of Berkshire’s core holdings for the long haul.
Compounding of investments
Here we go a little back to time. In our school, we study a lot about simple interest and compound interest.
But in real life, we are not applying the compounding. If we observe the warren buffet, we are surprised how his income returns exponentially?
Just think a minute about how much returns he earned every year?
It’s just 19% a year. That is the power of compounding.
Invest Before You Spend
Spending money is easy, but making money is difficult.
Here the Buffet tells invest the money before you spend because then only we can manage money by our requirement.
Spending more than what you want is breaking your life. learn to manage expenses.
It completely ruins your life.
Invest In Business, Not In Speculation
If you observe stock markets regularly, there is plenty of speculations.
Here we take an example that is YES BANK. In the first quarter of 2020 Yesbank is a hot stock for everyone.
Everybody is talking about the stock. Many retail investors are willing to buy this one, but where is the stock price today?
Now we take another example that is Titan Stock.
The Titan business is very good. It is fundamentally strong and gives constant returns. In the last 12 years, it gives 25% returns every year.
Fundamentals of the business are very important.
Like these do proper research about the business and then only invest.
Don’t follow anyone’s advice blindly.
Don’t Borrow Money To Buy Stocks
Buying stock is a good thing, but buying with debt money is not good. Because the future is unpredictable.
If you borrow the money, you need to pay interest and it will become to burden to you. It will affect your investing journey. So be aware of that.
No To IPO(Initial Public Offer)
According to Warren Buffet IPO(Initial Public Offer) is not a good thing. He always told us to buy business, not speculations.
Here again, we take an example, SBICARD. Sbi card came to IPO min march 2020. It is oversubscribed at this moment.
After coming to the market, there is a small correction in the market. Everyone was fearful and asked the company to give back their money.
These mistakes many immature investors do.
Wait for the right time to buy stock.
Here the seven things we do in warren buffet way.
If we follow these principles properly, We will beat the market and get good returns.
But we can’t follow these rules because many things affect our journey. That is Our emotions, family situations, speculations, etc,.
If you want to become Warren Buffet, be like him.
The above stock mentions are for article purposes only not to any stock recommendations.