Warren Buffett regularly ranks as one of the top three richest men in the world. He is believed to be the most successful investor in history. And, if you’re a new investor, you want to be like Warren. But, what is the secret to his success? Is it picking great stocks time and time again? No! It’s simply a powerful business strategy. Lets dig deeper…
A business, when managed properly, is guaranteed to make money! Here are Warren’s ten ways to get rich.
Don’t start before you spell out deal
Before you start a job, you have bargaining power. Buffett learned this lesson the hard way as a kid, when his grandfather hired him and his friend to dig out the family grocery store after a blizzard. They spent hours shoveling and only received 90 cents to split. Warren was horrified that he performed such backbreaking work only to earn peanuts. Ensure, you spell out the deal in advance — even with your friends and relatives.
When someone offers you a deal, quickly make up your mind and act on it. Warren calls any unnecessary sitting and thinking “thumb sucking.”
Watch your expenses
Warren Buffett admired a friend who only on the side of his office building that facing the road. He also once acquired a company whose owner counted the sheets in rolls of 500-sheet toilet paper to see if he was being cheated (he was). When you exercise vigilance over every expense, you won’t only make profits, but your paycheck will also go much further.
Always assess risk
When a company you work for is being investigated of price-fixing, you leave the company so you don’t go down with it. Warren Buffet advised his son Howie to imagine the worst-and-bast-case scenarios if he stayed with the company he worked for that was being investigated. He quit the next day. You have to look at all of the possible consequences when you’re struggling to make a decision. Asking yourself “And then what?” can guide you to the smartest choice.
Don’t base your decisions on what everyone is saying or doing
You have to be willing to be different. When Warren started managing money in 1956 with $100,000, people predicted that he’d fail. However, when he closed his partnership 14 years later, it was worth more than $100 million. Warren looked for undervalued investments instead of following the crowd and ended up vastly beating the market average every single year. To Warren Buffett, the average was what everybody else is doing. So, judge yourself by your own standards and not the world’s if you want to be above average.
A small amount can turn into great wealth
When you first make money, you may be tempted to spend it. Don’t! Warren Buffett learned to reinvest the profits at an early age. In 1945, when in high school, Buffett and a pal spent $25 to buy a used pinball machine, which they placed in the local barber shop. They had several pinball machines in three different barber shops within months. When the friends sold the venture, Warren Buffett used the proceeds to buy stocks and to start another small business. By age 26, he’d amassed $174,000 — or $1.4 million in today’s money. Remember, to always reinvest your profits.
Limit What You Borrow
Warren Buffett built his wealth by getting interest to work for him instead of working to pay interest. Living on credit cards and loans won’t make you rich. Warren’s advice for those already in debt – “Negotiate with creditors to pay what you can. Then, when you’re debt-free, work on saving some money that you can use to invest.”
Know When To Quit
When Warren Buffett was a teenager, he went to the racetrack and bet on a race and lost. He then bet on another race to recoup and lost again. He had squandered nearly a week’s earnings. He never repeated that mistake. Know when to walk away from a loss, and don’t allow anxiety to fool you into trying again.
Warren Buffett acquired the Nebraska Furniture Mart in 1983 because he liked the way its founder, Rose Blumkin, a Russian immigrant, built the Nebraska Furniture Mart from a pawnshop into the largest furniture store in North America. Her strategy was to She was a merciless negotiator and undersold the big shots. This is why Warren Buffett acquired the mart. To him, Rose embodied the unwavering courage that makes a winner out of an underdog.
Know What Success Really Means
Warren doesn’t measure success by dollars. He pledged to give away most of his fortune to charities. He doesn’t want Warren Buffett buildings or halls. Furthermore, he says that nobody in the world loves those who get testimonial dinners and hospital wings named after them. The ultimate test of how you’ve lived is to see the people you want to have love you, actually do love you. That’s the meaning of success.
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