Warren Buffett is a smart guy when it comes to money. You don’t get to be in the top five richest people in the world by running up huge credit card bills or not knowing how to invest wisely. This guy knows what he’s talking about and it’s not all that complicated. Check out his principles:
1. Have Enough Cash So No One Can Determine Your Future.
Here’s what Buffett said about this “We pay a steep price to maintain our premier financial strength. The $20 billion-plus of cash equivalent assets that we customarily hold is earning a pittance at present. But we sleep well.” Most of us can’t identify with $20 billion in cash but everybody has a margin number they need. Some say it’s 3-6 months of expenses while others say it’s 3-6 months of income. Every man needs to identify what will help him sleep well.
2. Invest In What You Understand
It doesn’t matter how good a deal you’ve found or how cool an investment opportunity seems. If you don’t understand how it works, steer clear.
3. Bad Economies Are Opportunities For Good Investors.
Keep your head about you when others decide with fear and you’ll find bargains every where you look. Buffett looks at the current economy as a great opportunity to stock up on groceries at 50% off.
4. Bedrock Principles Are Immune To Downturn, Ride Out The Cycle.
If you’ve followed #1 you’ve got your cushion so you’re not afraid of the inevitable economic downturns.
5. Best Word An Investor Can Know is “NO” & Don’t Overpay
The goal in investing is to end up with more than you started. You can’t do that if you overpay. Don’t be afraid to walk away
Warren Buffett is an investment stud and the principles he follows are simple. Go and do likewise.