When it comes to making Investment decisions, one name that surely pops up in the mind is of Warren Buffett. In the Investment world, Warren Buffett enjoys a Rock Star –like status.
On account of his accurate understanding of financial markets and time-tested investment principles, his wealth has grown by leaps and bounds over a period of time. As per Forbes Billionaires List 2019, he is currently the 3rd Richest Person in the world.
Here are some investment tips from Warren Buffett:
1) Constantly Learn and Research about New Things:
Warren Buffett has accumulated his wealth by investing in stocks of various companies. That’s why; he spends most of his time in reading more and more about various companies, which provides him valuable information. He also reads a lot to know about new opportunities in the investment world. Warren Buffett believes that more you read, more information you will collect, which in turn will help you to evaluate available options more accurately.
2) Think about Long Term:
Buffett believes that big money is made by holding investments for long term. He himself has made money from those stocks which he has held for several years, even decades. He does not believe in taking short term profits by selling off the shares whose price have increased within few days or months.
3) Don’t follow the crowd:
There is more than one reason why Buffett warns against following the crowd or having such herd mentality. Firstly, to generate exceptional returns and rise above the masses you will have to take exceptional decisions which others have not thought about so far. Secondly, if you follow others, a particular decision may prove to be beneficial for him/her, while the same may not be advantageous for you because all individuals have different expectations and different risk appetite in terms of money.
4) Don’t Miss the Opportunity:
Warren Buffett advises that while thinking of investments, think like an entrepreneur who always looks for opportunities to do business and make money. Well, this is possible only if you follow Tip No.1 i.e. to Constantly Learn and Research about New Things.
5) Your Expenses should be Lesser than you Income:
This is a very basic rule, because you can think of investments only if you have surplus money and you can have surplus money only when your expenses are lesser than you income. Buffett recommends that, while buying things, you should always be doubly sure, whether you need that thing or not.
6) Dont invest Until You are 100% sure:
Warren Buffett advises that in cases where you are not sure about certain things related to a prospective investment, you should avoid it. Avoid such investment proposals which generate even a slightest doubt in your mind, for which you do not get a satisfactory answer despite of researching and speaking to experts.
7) Don’t Put All Eggs in One Basket:
This is quite self-explanatory. What happens if you put all eggs in one basket and the basket falls down? Similarly, every investment is prone to risk. So if you invest all your money in just one stock/one instrument/one plan and if it does not work or goes wrong, you may end up losing all your money. Thus it is advisable to diversify your risk by investing proportionately in different stocks/different instruments/different plans.