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Invest like Warren Buffet

Investments  |  27/10/2017  |   5 min read

Warren Buffet is the world’s most successful investor. Starting out aged 11 with his first stock purchase, he’s gone on to amass a personal fortune worth around $80 billion USD. Numerous books have been written about his investment strategies, outlook on life, and the secrets of his success.

If you’re pressed for time we’ve condensed his most famous tips into the 5 points below. They might not turn you into an investment billionaire, but they provide a solid foundation to get you started.

“Try to be fearful when others are greedy and greedy only when others are fearful.”

Or to put it another way - buy low and sell high.

While that may sound obvious, investors often get stuck in a herd mentality and follow whatever the rest of the market is doing. Buffett has a history of buying stocks for low when market events scare everyone else away.

“Both large and small investors should stick with low-cost index funds.”

The reality is you’re probably not an investment genius, and that’s fine. Investing in a low cost index fund is a great way for both beginners and seasoned pros to benefit from slow and stable returns.

In 2007, Buffett bet a New York hedge fund $1 million that his simple, low-cost investing strategy would outperform the hedge fund industry over 10 years. He won.

“The investor of today does not profit from yesterday’s growth.”

This is like the disclaimer at the bottom of this page – past performance is no guarantee of future results. So while Bitcoins may have been on a hot streak, there’s no guarantee that’s going to be replicated over the next 12 months. What’s important with any investment is its future outlook and how that aligns with your goals, not what happened last month.

“Our favorite holding period is forever.”

As Buffet explained to Forbes magazine way back in 1974, you should “buy into a company because you want to own it, not because you want the stock to go up.” That doesn’t mean you have to hold the stock forever, but you should be looking at the long-term potential of any business.

“Anything can happen anytime in markets… Market forecasters will fill your ear but will never fill your wallet.”

We’ve never had access to so much information. And most of it is entirely useless. The world is full of self-proclaimed experts, and if they were half as good as they claimed they’d be sailing the world in a yacht.

As long as you’re confident in your portfolio, have realistic expectations, and take a long term view you’ve got the fundamentals of investment down pat. As for the rumours that Warren Buffet reads something like 500 pages of stock reports on any given day, well that’s a whole other story.

 

Originally published by Clover. Learn more about your invstment options with Clover's automated investment advisor.

 

This information is provided for general information only. It does not take into account your personal objectives, financial situation or needs and should therefore not be taken as personal advice. You should consider whether it is appropriate for you before acting on it and, if necessary, you should seek professional financial advice. Before making a decision to invest in the Equipsuper Superannuation Fund, you should read the relevant Equip Product Disclosure Statement (PDS). Past performance is not an indication of future performance. Issued by Equipsuper Pty Ltd ABN 64 006 964 049 AFSL 246383.  MySuper Authorisation Numbers 33813823017672 and 33813823017518  (‘Equip’, ‘the Fund’ and ‘the Equip Rio Tinto Fund’).

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