Investing Lessons of Warren Buffet

Firstly you may be thinking who is warren buffet? Why we are talking about him.

The answer in might is you know if you are an investor or a stock market guy. He is the richest investor in the world. He made all of his wealth from investing in the stock market.

He was not super wealthy by birth.  He was born into a normal family. And he started his investment journey at 11 years old.

In the start, he made money by selling newspapers, chewing gum and coco-cola door to door.

Just think from selling newspaper from door to door he made the richest investors in the world. How awesome is that journey?

Today we will talk about their life lessons. Lessons who made a child to the richest investor of the world.

He also agrees that one skill that made his the richest investor is saving, not very good business analyzing skill or any other skill.

He started saving from when he was just 11 years old. And the money he saves, he invested that money in the stock market.

“If you buy things you don’t need then very soon you have to sell things you really need”.

Warren Buffet

Common Mistake People Do

Most people do this mistake that when they got their first salary they just start spending.

They spend on new costly clothes, gadgets like a new mobile phone, new television, etc.

This makes them feel happy for some time. But if you see the long term picture this can’t give them any worth, because all the physical things they depreciate their value with time.

I am not saying that you should not buy things that make you happy. I am just saying that you should not buy those things which you don’t need.

Most of the people spend all their salary on these things. Thay neither save much money nor invest.

How much you earn doesn’t matter. If you want to become rich in the long term then how much you save matters a lot.

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And secondly, how well you invest that money.

Now you may think if you take an example of the SIP if you only save 4000 extra money every month and invest that money then after 35 years from this extra saving you will have 33 crore rupees.

Most people do this mistake that they start saving at the age of 25-30 year, This is too late. This is one of the most important reasons why the warren buffet is so rich because he started saving at the age of 11 years.

Now he is 90 years, It means he is saving from the last 79 years. Lsat 79 years he is saving every month.

If we save only 4000 rupees and invest them well for 79 years, can you imagine how much wealth you can accumulate? Let me tell you, we will have 2 lakh crore rupees. Only from saving 4000 rupees monthly and investing them well.

Now some people thought about inflation. Let me tell you- yes, inflation is a very big cause to reduce your investment. But in India normally the inflation rate is 6-7% per year.

This will not affect your investment much if you do some research before investment.

Inflation will affect if you are invested in f.d or any other fixed instrument where you get only an 8-9% return per year. But if you wisely invest your savings then you can get 20-25% or even 30% return per year in the stock market on your savings.

How to get a 25-30 % return on your investment

There some people may ask that if warren Buffett gets 21% CAGR (compound annual growth rate) then how we can get more return then him.

And also many mutual fund advisers and mutual fund companies advertise that if you are getting 15-16% CAGR, it is good.

But this is the most misleading fact, even they want you to think that getting 15-16% CAGR is a good thing.

Now, if we talk about Warren Buffett, he has a very huge amount of wealth, so getting only 21% CAGR is a very fantastic thing. He also accepts this fact that if he had some lacks or some crore rupees then he can get 40-45% CAGR easily.

You may know this fact that in India only Sensex gives 15-16% CAGR for the last 15 years. So if we do some research and invest according to that then we can get more than 20-25% CAGR easily.

We also have to know that the US is a developed nation, growth rate os the US is very slow, the US index gives 6% CAGR. India is a developing nation, India is a growing economy, Indian index gives 15% CAGR.

You can easily get more than 20-25% CAGR if you do some research from your end and invest in good stocks. If any mutual fund adviser is saying you to keep your expectation, it means he wants you to keep your expectation low, so that if he performs poorly you can’t complain.

How to Save More

This is the first thing we should know because when we save more then we can invest more and then we can get more return.

If we talk about warren buffet in spite of being so rich even today he is living in his 50 years old house. He can buy a big house but he doesn’t buy. Because he knows the power of saving.

 He doesn’t have any luxury car. Even he doesn’t have any charted plane.

HE is more focused on savings. He says that he made rich by his savings.  

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As I said you earlier that if you save every month and if you get a good return every year, you will be rich in 20-25 years. If your returns are not that good then it may take 5 more years to become rich. But the important point is to save money and invest them if you want to become rich.

You will become rich if you are saving and investing by full discipline and you have many partitions.

1st Life Lesion

 It is true that the thing we were talking about is the main reason why Warren Buffet is super-rich.

After all their savings, patience and their hard work, Warren buffet also follow some life lessons. He says that these life lessons are also important to become rich in the long term. So now we will talk about warren buffet’s some life lessons and analyze their true potential.

He says that whatever you are doing, do that by thinking that whatever you are doing is going to be print on the front page of the newspaper the next day.

It may sound ridiculous, but he also explains thinking behind these lines.

He says that if you think that whatever I am doing if it going to print on the front page of the next day newspaper then you surely will do the right thing all the time. There is no chance to do any misleading act which may harm anyone. And we will think 10 times before doing anything. In this case, we will try to avoid all the things which destroy our life.

If we analyze then we will know how deep is this. Warren Buffet is super rich because their values are so high. He thinks about others, before thinking about himself.

2nd Life Lesson

Now second life lesion which warren buffet follows is another example of warren’s nature.

He says that you should behave to other people the same as you want people to behave with you. We all want that everyone behaves well to you, but sometimes we don’t behave in a manner as we want for ourselves.

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Warren says that today someone may be younger than us in terms of money, age or anything but you don’t know when he became more rich or powerful and help you any manner.

You should make a good relation with other people and behave well. If you helped someone then someday he will help you.

3rd Life Lesson

 Maybe you know this fact that rich people are also two types first riches are people like Vijay Malya and Nirav Modi second types of riches like rattan tata and Adi Goderaj.

Some people are rich like Vijay Malya and Nirav Modi, they may have money but there is a high possibility that you will lose that money as well as respect.

But some people are rich like Ratan tata and Adi Goderaj, they will have money as well as respect and authority.

Now it’s your turn to choose which type of rich you want to become.

Honest & Ethical

Warren Buffet says that be honest and ethical is not only quality but it is also very necessary to run a business.

Any business grows continuously if the customer of that business knows the fact that the people behind the business are honest and ethical.

He says that being honest and transparent to your customers is also helpful from a business angle.

THE BEST BUSINESS STRATEGY IS TO BE TRUTHFUL.

Warren Buffet

Warren says that it takes time to earn respect and faith but losing that respect and faith takes no time. If we do things by keeping this in mind then we will do the right thing all the time.

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How to Invest Well

All of the warren’s rule this rule is also very simple. He says that when the share market increases drastically when everyone is investing in the stock market then you have to sell shares. And when the stock market is down and everyone is selling in the market then you have to buy shares.

His famous quote is “Be fearful when everyone is greedy and be greedy when everyone is fearful.”

You just have to do things most people are not doing. You have to do just the opposite thing most people are doing. And this is the most simple rule to earn money in the stock market.

One thing you should not do is to listen to people. You may realize also that when the market is running all the television commercial are talking in favor and when the market makes any lower circuit all the tv analyst says that keep away from the stock market.

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