"True Way to Investing" by the Greatest Stock Investor of All TimeApril 18, 2017
There is only one true way to investing. I don't claim to know it all. I am just a humble fan, a follower, a worshipper. But most of all, a student.
I'm a Warren Buffett fan. And the greatest way to investing, is to follow Warren Buffett's advice.
Warren Buffett never wrote a book. He never sold a product to other people. He never ask for payment for the gold nuggets he drops. When people ask him for investing tips, he gladly gives it.
The man is a genius, and we should learn from him.
From all of his advice, here are the 3 best.
Rule #1: Never Lose Money
Taking risk is part of investing. And it means the possibilty of losing money. Its part of the game. But it doesn't have to be.
Warren Buffett and his mentor Benjamin Graham, says to minimize the risk of losing money, there should be a margin of safety.
Margin of safety is a complicated word. But the meaning is simple. Buying a company so cheap that acquiring it would instantly result in profit.
Margin of safety occurs when a good company becomes so out of favor that buying it is a steal.
Rule #2: Invest in Low Cost Index Funds
90% of fund managers can not beat the index. The odds of normal people, performing better, is hard.
Its important to remember the "low cost" part. Because you will lose money otherwise, which contradicts Rule #1: Never Lose Money.
Warren Buffett said that when he dies, he wants his estate be invested in a low cost index fund. It speaks volumes about the strategy and gives a normal investor a fighting chance in making a better return on investment.
Rule #3: Give it all away
Once you made enough money, give it all away.
Large sums of money given to your children may not be the best way to leave the world behind. Hardship builds character and giving money to your children robs them of the opportunity to grow.
Leaving them with just the right amount, may be enough.
Warren Buffett will donate his money to charity when he die. That's the largest and greatest act of philantrophy to date, worth billions of dollars. An act that we all should emulate.
That's the 3 best Warren Buffett advice coming from me. Did you agree with Buffett on some things or all things?
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