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If you intend to invest in the stock market, I am pretty sure that you have heard of Warren Buffet. He is undoubtedly the most successful investor in history, and his track record shows that.
He’s the founder of Berkshire Hathaway, a company that owns subsidiaries involved in varied business activities. Warren’s life is a fantastic story of perseverance, willpower, and the right vision of achievement. His story has inspired so many to become self-made millionaires.
Here are ten lessons I learned from Warren Buffett about wealth:
Invest in a business you understand
If you plan on setting up a business, you must invest in a business you understand. Having a clear understanding of what you intend to invest in is vital in business, as it is one of the best ways to minimize risks that may arise. If you do not understand how something runs, how can you be sure it won’t crash and burn?
For instance, when everyone was certain that dot com business was a good investment in the 90s, Buffett declined to invest because he didn’t understand the industry.
Think long term success
Warren Buffet states that he never tries to make cash on the stock market, but instead purchases on the assumption that they may close down the market the next day and reopen after a few days.
It would be best if you strategized for long-term achievement in your business niche. Buffett is always focused on investing in companies that he believes will produce long-term results.
He isn’t interested in the trendiest stock everybody is running after. He has a mindset that many investors don’t possess – focusing more on long-term success.
Failure isn’t the end
When Buffett gained control of Berkshire Hathaway in 1965, it was a textile company. He intended to turnaround its turnover, although he failed because Berkshire Hathaway was already a dead business.
However, Buffett saw what other investors didn’t see; its subsidiaries. Equipped with these assets, he repositioned the company to become what it is today. This example emphasizes Buffett’s lesson that there is no absolute business crash.
Even a dead company has some assets, but it will take a well-trained eye to glimpse such assets.
Work on your reputation
Although an intangible notion, having an excellent reputation in business can benefit you in many ways. The confidence of the customer can have a profound and direct effect on your business’ bottom line.
If your company has a good reputation, customers will prefer you even if many businesses offer similar products or services at lower prices. Warren Buffett has stressed the importance of having a good reputation and even attributes his success to a good reputation.
Hang around with smart people
If you surround yourself with people who do not care about improving their lives, you will become like them. If you wish to accomplish great things, be it in business or your personal life, make sure you hang around with the right people.
Buffett believes that it is crucial to surround yourself with people who are more successful, wiser, and generally better than you that are on the same path as you. This way of thinking shows that he is always determined to grow and improve.
Management is the pillar
The success of any company largely depends on its managers. A strong management team should make the right choice and ensure that the business can use any opportunities that come its way.
Simultaneously, a good management team protects the company by projecting and acting against whichever threats to its welfare.
Management is among the key features Buffett looks out for when investing in a business as with good management, profitability is sure.
The power of multitasking
If there’s one thing I learned from Warren Buffett, it is the determination to succeed.
Warren Buffett was born with commerce inside his blood.
He bought his first stock at the age of 11 and worked in his father’s grocery store in his Omaha town.
While still a high school student, Buffett was running multiple businesses. He used to sell refurbished golf balls, peddled stamps, operated a pinball machine network, and ran a tenanted company.
Do not invest blindly
While Warren Buffett is undoubtedly one of the most successful investors in history, not all of his investments were successful. But what set him apart from other investors is that all his investments were thought out and did follow value principles.
Buffet has achieved what many investors have not by keeping an eye on new opportunities and sticking to consistent strategies.
I have looked at people who have succeeded in business and as investors, and I see something they all have in common: making wise decisions.
Passion is paramount
We all know that starting a business is a tough decision filled with the enthusiasm of embarking on a new voyage and also filled with many concerns about the risks and the uncertainty involved.
This is the part where passion comes into play. Often we tend to dismiss passion. We acknowledge it as an essential factor, but not as crucial as startup capital, a good business plan, among others.
Nothing can work if you do not have the passion and motivation behind it, and Buffett has always been passionate about everything he does.
Money is not everything
Warren Buffett, perennially listed among the richest men in the world by Forbes, still lives a lifestyle that has not changed much.
He still lives in a house he bought more than 40 years ago. Buffett drives himself to work daily and dines at cheap restaurants in Omaha. He is widely renowned for being humble, polite, and charming.
In 2006 Buffett announced he would give 85% of his worth to charity. To date, he has donated more than 50% of his fortune to various charitable organizations across the world.
There you go. I hope that every aspiring investor could learn from Warren Buffett’s words of encouragement and guidance. His principles are proven both in the day to day life and in business.