They don’t call Buffett the ‘Oracle of Omaha’ for no reason. The investment genius has created quite the name for himself, causing an entire community to follow closely in his footsteps, picking up all the comments and suggestions he drops- you should do the same.
The best thing about Buffett is that he likes to keep things simple, well aware of the fact that the average investor does not hold the expertise of a seasoned trader. Without further ado, here’s how Berkshire Hathaway’s legendary chairman advises people to invest, even if they aren’t habitual of following the stock market.
- Stick to the S&P 500 Index Funds
Buffett might well be one of the best investment pickers in the world, but you don’t possess the same market knowledge as him, so it is recommended that you stick to the S&P 500 Index Funds. For years, Buffett has advocated for the margin with this method for Americans to substantially grow their wealth. Essentially, once you invest in S&P 500, you automatically become an investor in all the 500 companies that the index tracks, which include Buffet’s very own Berkshire Hathaway, Apple, the Bank of America, etc.
- Keep the Fees Low
Buffett is known to frequently point out that most fund managers whose mission is to outperform big indexes like the S&P 500 almost always underperform it. You’d think that their not-so-stellar track record would make them charge less, but on the contrary, these managers demand an arm and a leg from their clients.
Don’t be wooed by the honey-like dialogues and promises of reaping big profit margins. Instead, go for the lowest expense ratio that is available to you. This will ensure that more of your money goes into your investments and less into the pockets of these fund managers.
- Pay Off Your Dues
A credit card debt will drown your boat even before it touches high tides. Despite the fact that Berkshire Hathaway often profits from credit cards thanks to their financial sector holdings, Buffett warns people not to enter the world of investment with debt on their hands. The logic of the matter is, most credit card interest fees are substantially high, ranging up to 20%, and the stock market is known to give average annual returns of 10% only.
- Invest in the Long-term
Buffett always highlights the importance of long-term investing- basically ignoring the short-term gains and going all into growing your wealth over time through long-term investments. With long-term investments, you can even take more risks because of all the time you’d have to recover. Plus, the worth of American markets, says Buffett, just keeps growing.
Take Away
Not many people are well-versed in the art of investing or keeping up with the stock market. Even so, investment is a form of wealth-multiplication that people from all walks of life should know about and benefit from. Hence, it is advised that you look into these genius tips and start growing your wealth asap.
