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Warren Buffett is a
Warren Buffett is a successful investor, and his tips for investing are surprisingly accessible.
Most of his methods are simple, straightforward and timeless. Here’s some of Buffett’s best money advice.
Money isn’t everythingSome material
Money isn’t everything
Some material things make my life more enjoyable; many, however, would not.
A vast collection of possessions often ends up possessing its owner.
Money offers a lot of options. But, of course, it’s important to remember the things in life that truly matter most.
Pay yourself firstIf you
Pay yourself first
If you want to make saving a priority, take a look at how you budget.
Don’t save what is left after spending; spend what is left after saving.
Paying yourself first is an automatic way to prioritize your savings. Set up automatic monthly deposits into your savings account. And think of your savings and investments as a monthly bill.
Investing is easier than
Investing is easier than you think
If you invested in a very low-cost index fund—where you don’t put the money in at one time, but average in over 10 years—you’ll do better than 90% of people who start investing at the same time.
If you have some money that you want to invest outside of your retirement accounts, it basically comes down to a few simple steps:
- Learn some basic investing terminology.
- Open a brokerage account (Vanguard, E*Trade, etc.).
- Pick an index fund (Buffett suggests VFINX).
- Buy the fund through your brokerage account.
Don’t underestimate your habitsMany
Don’t underestimate your habits
Many people underestimate the bad money habits that can eventually take over their finances. We often don’t wise up to our habits until they’ve become hard to manage.
If you want to change your habit, first break it down.
Understand your cue, reward and routine. With those in mind, you can work toward breaking the cycle of your habit.
Invest long-termBuffett always promotes
Invest long-term
Buffett always promotes the big picture. Do not get caught up in daily valuations. Instead, think long-term.
If you aren’t willing to own a stock for ten years, don’t even think about owning it for ten minutes.
If you’ve picked your index fund, it might even be best to not check on it every day. If you look at your daily valuations, you might get discouraged and be tempted to sell your stock at the worst time.
Break the paycheck to
Break the paycheck to paycheck cycle
Some examples of “patches” in the paycheck-to-paycheck cycle:
- Payday loans.
- “Hardship withdrawals” from your retirement account.
Here’s how to deal with them:
- Look for regular expenses you can trim.
- Reevaluate your needs versus wants.
- Downgrade.
- Learn some basic skills to deal with emergencies yourself.
Price and value are
Price and value are not the same things.
Buffett is notoriously frugal. And frugality is all about value.
Price is what you pay; value is what you get. Frugality isn’t about buying anything at a low price. It’s not about paying a lot for something just because it’s valuable, either. it’s about buying value at a low price.
The key to making a smart spending decision isn’t just price; it’s value, too. So when you’re getting a deal, calculate value into the equation.
