Categories: Investments

Investing 101: Warren Buffett’s Advice For Beginners

Stock market advice is critical in increasing your investments and making more money. Hey, we’re not talking about insider trading or anything illegal, but when someone with knowledge of the stock market speaks up, we’re going to listen to what he or she has to say.

One of those people happens to be Berkshire Hathaway CEO, Warren Buffett. The 87-year-old Buffett — who is one of the richest people in the world and the wealthiest in the state of Nebraska — carries a net worth of $85 billion, and has made a living giving stock market tips, investing advice and words of business wisdom on people for over a half-decade.

After Warren Buffett formed Buffett Partnership Ltd. in 1956, he quickly made a name for himself in the investment world, eventually taking over the reigns at Berkshire Hathaway, and leading the charge of overseeing the company’s holdings in industries like media, energy, insurance and others. Since then, his keen stock market acumen mixed with business success has led to respect from fellow businesspeople, which is why, when Buffett speaks, people listen.

For those beginners in investing, it’s important to have rules to follow. So, we thought, who better than Warren Buffett to provide those? Oh, right, nobody. And, whether you’re just thinking about dipping your toes into the stock market, are looking to for what trends might take off in the next month or so, or just trying to sharpen your understanding of business skills, we’re giving you some of Buffett’s best investment advice.

Diversifying On The Stock Market Isn’t Always Best

“Wide diversification is only required when investors do not understand what they are doing.” That’s a direct quote from Warren Buffett, who makes his case against diversifying stocks because it’s, “protection against ignorance.” In other words, have faith in the investments that you do make, and have a long-term mentality in seeing rewards from them.

Understanding Your Investments Is Key

You wouldn’t give a friend money for a new business without looking over his/her business plan first to understand the concept, would you? We certainly hope not. Along those same lines, Buffett stresses the importance in investing in things that you know about, believing that, if something is too complex to understand, simply focus on another business to invest in.

Forget The Stock Market, Invest In Yourself Before Anything Else

Need some motivation to believe in yourself? Allow this quote from Warren Buffett do the trick, as the Berkshire Hathaway CEO once said, “the best investment you can make is in your own abilities. Anything you can do to develop your own abilities or business is likely to be more productive.” If you don’t have confidence in your strengths, as well as identify and work on your weaknesses to get better, you’re doing yourself an injustice.

Make Mistakes, Accept Them, Move On

It’s inevitable for a person to make mistakes — whether in the stock market or elsewhere. When they happen, Warren Buffett says that they should be accepted, learned from and then moved on from. Sure, it’d be easy to stew over losing hundreds or thousands of dollars, but that doesn’t make a person get any better. For Buffett, make mistakes, write them down and know how to avoid them again.

Trust In Your Own Abilities

What do the words stock market expert really mean? Well, at first glance, they’d mean someone who has a proven track record of success in investing in companies, right? Even so, that person has lost; and plenty, therefore, even a so-called expert should be challenged if your own gut is telling you so. This is a piece of advice that Warren Buffett believes in, understanding that, to be successful, it takes work to educate yourself and, sometimes, go against someone who, on paper, looks like he/she knows it all.

Patience Is A Virtue

When it comes to the stock market, there’s almost no better trait than patience. A great quote from Warren Buffett to describe patience is this: “Someone’s sitting in the shade today because someone planted a tree a long time ago.” The lesson here is simple, it’s rare for people to get rich overnight from investing, and, to think it’s going to happen is foolish. Therefore, take the advice from above — investing in yourself, trusting your abilities, and learning from your mistakes — and apply them to investment decisions to build a strong portfolio slowly, seeing the benefits over time.

Lead image via YouTube

The Editorial Staff

The Editorial staff are financial enthusiasts and analysts from across America. Their profession expertise extends to corporate consulting, accounting, and financial strategy.

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