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10 Warren Buffet Rules To Investing
Warren Buffet is one of the best American business magnate, investor, and philanthropist. Not even mentioning that he is ranked at in the top 10 and currently at the number 5 position of the world's richest billionaires according to Forbes.
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What if you were to invest your money into your very OWN business and grow it to such an extent that you do no need to Invest your money like Warren Buffet and treat your business as an investment by having multiple sources of income? Well you go can do it right here.
Let's get right into it...
Herewith 10 of Warren Buffett's rules to investing:
Rule 1: Never Lose Money
Yes I know it's easier said than done right? By not losing money you have to power to start growing your investment capital and expand or venture into new investments. Look for something stable and read as much as you possibly can about the investment you are approaching. A very good book to help you will be Principles by Ray Dalio.
Rule 2: Do no forget about Rule number 1
Always keep rule number 1 in mind when making you decisions. If you researched enough (and it can take you weeks, even months) you will start to see opportunities you have never seen before.
Rule 3: Never bet against a country like America
Take the S&P 500 as a good example. The Standard and Poor's 500, or simply the S&P 500, is a stock market index tracking the stock performance of 500 of the largest companies listed on stock exchanges in the United States. The average performance over the years is currently at +- 11.88% . Now you have to start thinking about compound interest.
Rule 4: Be greedy when other are fearful and fearful when the majority is greedy
In very simple terms this means that you have to look at when the market is low and start investing and keep on building. Keeping all rules in mind. This leads to rule number 5.
Rule 5: Have extra money readily available
When you have extra or so to say spare investment money available, you have the power at your hands to invest when the market is low which will give massive growth opportunity when the market does decide to rally.
Rule 6: Understand your stocks or investment you are looking into
You don’t need to understand the intricacies of what a product is or how it works, you have to understand what the economics of the business are likely to look like decades from now. Simple terms, look into the future of the company meaning after you have done your analysis and based on historical data, make a future investment growth prediction.
Rule 7: Look for safety in the margin's
Prioritizing a margin of safety is a cornerstone of Buffett's investment philosophy. In simple terms, a margin of safety refers to characteristics of an investment that help to protect investors from losing money. If a stock trades for $5 and it's realistically worth $7 you have a $2 margin for safety. If you not understand this leave me a comment below or ask your questions below.
Rule 8: Focus on good quality
No matter how cheap a stock might be, always focus on the quality of the stock and if you really does have a future. This all boils down to one word "research".
Rule 9: Learn some of the basic rules of investing
Let's say the stock of a company sell's for $200. You want to buy the stock for a lower price and then keeping in mind that the actual worth of the stock must be $200 or more. This is where your profit will come from.
Rule 10: Don't easily sell your stocks
You should invest in a business that even a fool can run, because someday a fool will. You want to sell some of the growth of the stocks for a profit and use the rest of the growth to buy more stock or invest in other very profitable opportunities. The more valuable stocks you have the bigger your overall investment porfolio.
There are so many things you can learn from this and 10 Warren Buffet rules for investing is just a starting point. NEVER stop learning and actually applying what you learn. Knowledge in itself is not power, but the application of knowledge is power.
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