I have read a brief article in one of the additions of Parade published with the title of “Warren Buffets secrets that can work for you.” In that article 10 such things are written that are followed by Warren to become a rich person.
Here I am sharing those 10 ways that are suggested by him.
1. Reinvest Your Profits
At first when you have initiated a business and have started making some money, don’t just try to spend all of it right away. But rather than that, use it to expand your business and try to make big profits with it.
2. Be Willing To Be Different
It was written in that article that instead of following the herd, Buffet had focused on undervalued investments and beat the market year after year and that makes a lot of sense. According to Buffet, the meaning of average is just what everybody else is doing. The point of explanation is that, we shouldn’t choose identical fields to work like others are doing neither we should follow the same method of doing things what everyone else is already doing.
3. Take The Right Decision At The Right Time
Collect your information and make a decision. To take an extra time in making decisions are nothing else but just a waste of time. The article states that when Buffet gets offer of a business or investment from other people offer, he makes a decision on the spot.
4. Spell Out The Deal Before You Start
Before starting any new deal always agree on the specifics of any deal. It has been noted by Buffet that your bargaining position is greatest before beginning work on a job. So, even if you are having any deal with friends and relatives, make sure everyone has understood and agreed to the details of the deal before the deal starts.
5. Watch Small Expenses
I think this is the thing that has encouraged him to recommend low cost index funds. You can yourself analyze that a huge amount is being charged in terms of fees by those hedge funds. Of course, this suggestion extends far beyond just investing advice. If you put a limit on your expenses in all areas of your life then it will extend the reach of your paycheck as well.
6. Do Not Borrow Too Much
The article says that Buffet has never borrowed a huge amount of money. He advises us to become debt-free and then save some money to start investing. This suggestion given by him is quite a bit different from all the other gurus who always claim that rich people get rich by using other people’s money.
7. Be Persistent
It has been claimed by Buffet that those who possess persistence can win against a bigger and/or more established competitor.
8. Know When To Quit
Sometimes, we face such situations when the best thing that we can do is to just cut your losses and walk away instead of throwing good money after bad. He suggests that when you are down, resist the inclination to win it all back with the next bet.
9. Assess The Risks
A situation has been described in the article where Buffet advised his son to imagine the scenarios of worst-case and best-case for a certain course of action. This exercise provides you a help to understand the risks and rewards for whatever decision you are making.
10. Know What Success Really Means
In the article it is written that Buffet does not measure his success by dollars. About success Buffet says that he had known people who had a lot of money and they got testimonial dinners and hospital wings named after them. But the truth was that nobody in the world loved them. He said that when we will get to his age, we’ll measure our success in life by how many of the people we want to have love us actually do love us. That’s the ultimate test of how we’ve lived our life.