Warren Buffett is perhaps one of the most successful investors in the world. He is also one of the richest people in the world. Here are some lessons you can learn from the “Oracle of Omaha”:
- Live Below Your Means
Warren Buffett has a net worth of 77 billion. But he still lives in the same house he bought in 1958 for only $31,500. Compared to his income and net worth, Warren Buffett lives frugally. The rest of his money is protection in case of emergencies. Because he lives frugally, he can also invest more money, which will reap more rewards. Not only will his wealth grow faster, but it is unlikely he will declare bankruptcy. Consider this quote by him:
“I’m not interested in cars and my goal is not to make people envious. Don’t confuse the cost of living with the standard of living.”
- Skip Meetings and Other Unnecessary Time Wasters
Instead of having long, unnecessary meetings every year, Buffett sends a letter to each of his companies, praising victories from the past year, and stating his goal for the current year (see also: Warren Buffett’s “Not To Do” List). The result is he has more time to work on more productive projects and his employees have more time to work and accomplish goals.
Warren Buffett’s business partner Charlie Munger jokes about Buffett:
“You look at his schedule sometime and there’s a haircut.
Tuesday, haircut day.
That’s what created one of the world’s most successful business records in history. He has a lot of time to think.”
- Practice Your Communication Skills
Buffett hated public speaking when he was younger, but he knew it was necessary for him to be successful. So he enrolled in a public speaking course that eventually broke down his fear of public speaking and helped him become a successful public speaker. He now tells young entrepreneurs that the key to success is good communication skills.
- Research Before You Invest
Always research before you invest. Buffett researches each of his companies thoroughly and makes sure he can understand them before he invests. After he has deemed a stock to be strong, he invests generously. He also likes companies that can be easily run. After all, companies that are “so simple even a fool can run them” are relatively safe investments – even when fools ARE running them. Warren Buffett does not keep his researching method for investing a secret (see: The 4 Warren Buffett Investing Principles). You can use this as well when you invest:
“We select such investments on a long-term basis, weighing the same factors as would be involved in the purchase of 100% of an operating business:
(1) Favorable long-term economic characteristics;
(2) Competent and honest management;
(3) Purchase price attractive when measured against the yardstick of value to a private owner; and
(4) An industry with which we are familiar and whose long-term business characteristics we feel competent to judge.”
- Resist Trends
There are always trendy stocks to buy like Facebook, Apple, Snapchat, or Twitter. But Warren Buffett stays away from these, instead investing in stocks that have a proven track record. After all, there is no telling where the newer trends will go and how long the trendy investments will turn a profit.
- Have Fun
Warren Buffett does not understand why people will take jobs they do not like just to get ahead. He is a big believer in doing what you love because life is too short. Warren Buffett loves his job and investing which is why he spends effort and work on it. If he did not like his work, he would probably care much less about it and put a lot less effort into it and he certainly would not be happy. He once compared taking a job you did not like for the promise of future rewards to saving up sex for old age. He also once said:
“Not doing what we love in the name of greed is very poor management of our lives.”