Three Tips From Warren Buffett That Shaped My Investment Strategy | personal financing
There’s a reason I’m a fan of Warren Buffett, and not just because he’s managed to amass a fortune estimated at billions of dollars. One of the things that has always impressed me about Buffett is how generous he was with advice.
Whether it’s giving job search tips to recent college graduates or allaying people’s fears during the stock market crash, Buffett doesn’t seem to lack wisdom. And over the years, I’ve followed a lot of his advice in the course of building my portfolio. Here are some specific tips that have served me well and are worth paying attention to.
1. Look for quality, not compromise
Some stocks are trading at an exorbitant price point, to the point where, in the past, I’ve rejected the idea of buying them. But one thing Buffett has always said is that it’s important to focus on quality over price.
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You may have the opportunity to buy shares of a particular technology company at $200 a piece while shares of another company are trading for $500 a piece. But the $200 stock isn’t necessarily the best deal. So it is better to focus on the business that you are buying rather than the price at which they are trading.
By the way, many brokerages these days allow you to buy shares on a fractional basis. So if you are hesitant to spend too much on a single share of stock, there is no need.
2. Keep stock for a long time
Buffett famously said that if you are unwilling to hold a stock for 10 years, you shouldn’t own it for 10 minutes. And that’s the advice I’ve followed since I started buying stocks.
Some people think that they can get rich in the stock market by buying at a low price and selling as quickly as possible. But I strongly believe that the best approach is to load high-quality investments and hold them for many years so that they can appreciate their value.
3. Don’t fall victim to peer pressure
Years ago, meme stocks were nothing. Now, online influencers have the ability to push stock prices up or down.
But in the end, meme stocks are a risky bet, that is, because the companies behind them are often shaky and unreliable. So instead of buying meme stock because it’s trendy, it’s better to focus on quality companies that are likely to stay strong for years.
The same is true for cryptocurrencies. Many people have invested in digital currencies over the past few years. But if you are not comfortable doing this because you think cryptocurrency is too speculative, put your money elsewhere. (By the way, Buffett is not a fan of cryptocurrency at all.)
Learn from a great
It’s easy to look at someone like Warren Buffett and envy his success. But the truth is that while he never writes checks for individual investors, he is more than happy to share some of his secrets in hopes of helping others achieve their financial goals. Thus, whether you are new to investing or have been in it for years, it is helpful to keep these points in mind as you build your portfolio.
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