Berkshire Hathaway CEO Warren Buffett, who made himself a billionaire and the investing legend, turned 90 on August 30. He acquired knowledge and wisdom through decades of gaining experience, which made him the successful person he is now.
At a young age of 11, Buffett purchased his first stock, three shares of Cities Service Preferred. He bought the shares at $38, which unfortunately dropped at $27 and waited to reach $40 to sell for a profit. “Shares later hit $200 each, which Buffett has since cited as a lesson on patience in investing,” according to a news report.
He is currently the world’s third-richest man, acquiring a net worth of $86 billion. Moreover, Berkshire Hathaway, the company he leads, is the fourth largest globally with $819.7 billion in assets value.
Warren Buffett’s first piece of advice is to think long-term.
“Nobody buys a farm based on whether they think it’s going to rain next year. They buy it because they think it’s a good investment over 10 or 20 years.”Warren Buffet
Don’t base investing decisions on what companies are performing well at present. Take into account those businesses that have “staying power” when planning to invest in individual stocks. A small business, which may be going through its humble beginnings, may boom in the future if it has the power to sustain its operations; hence, there is little to no possibility of bankruptcy.
Cited in a news report is a letter to shareholders he wrote in 1996, telling them to “put together a portfolio of companies whose aggregate earnings march upward over the years, and so also will the portfolio’s market value.” He added, “if you aren’t willing to own a stock for ten years, don’t even think about owning it for 10 minutes.”
Second, Buffett advises to “keep a level ahead.” Markets are always volatile, but remain calm and don’t sell off investments. Trust the preliminary decision that the company will thrive through the test of time. In a news report, he advised, “don’t watch the market closely” amidst market fluctuations; always stay the course.
Thirdly, for Buffett, the most significant decision of one’s life is choosing who to marry. Two years after his first wife, Susan Buffett, passed away in 2004, he married his longtime friend Astrid Menks.
“You want to associate with people who are the kind of person you’d like to be. You’ll move in that direction”Warren Buffet
He further emphasized in his other speeches and conversations how serious he is about marrying the right person.
“And the most important person by far in that respect is your spouse. I can’t overemphasize how important that is.”Warren Buffet
Fourth, he always explains that “a reliable way to take advantage of market gains while hedging against risk” is to purchase index funds. For him, it is a way to boost retirement savings for the reasons that they are inexpensive and untied to the success of an individual entity.
The fifth is to invest in oneself. Cited in a news report, Buffett told the Yahoo Finance editor-in-chief Andy Serwer in 2019 that “by far the best investment you can make is in yourself.” Invest in health care, education, and technology that will hone one’s skill and well being.
Lastly, even though Buffett made his fortune through money and investing, he reminds people that “money isn’t everything.” For him, the measure of success is not based on the money you can accumulate but on the quality and quantity of relationships built with others.
In his 2008 talk with MBA students, he said that it is not money, but “being given unconditional love is the greatest benefit you can ever get.”