Tuesday, August 20, 2013

Warren Buffet’s Ten (10) Ways to Get Rich

Warren Buffet
Briefly Warren Buffett is Businessman and investor he was born on August 30,1930, in Omaha, Nebraska. Investing by age 11, Buffett was running a small business at 13. Buffett later started the firm Buffett Partnership in Omaha, with huge success. In 2006, Buffett announced that he would give his entire fortune away to charity (est. $62 bil.), the largest act of charitable giving in United States history.
When interviewed by Parade Magazine sometimes back Warren Buffet he revealed the following secrets that can work for you.


Reinvest your profits

When you first start making some money, don’t spend it all right away. Rather, use it to grow your business and increase your profits.

Be willing to be different

Instead of following the herd, Buffet focused on undervalued investments and beat the market year after year which makes a lot of sense. It then states, "To Buffet, the average is just that – what everybody else is doing, don’t just do what everyone else is already doing in the same way that everyone else is already doing it.

Never suck your thumb

Gather your information and make a decision. Calling any extra time wasted before making a decision "thumb sucking," the article states that when people offer Buffet a business or investment, he makes a decision on the spot. “From my own experience I have lost a lot of business opportunities due to this.

Spell out the deal before you start

Always agree on the specifics of any deal before starting on it. Buffet notes that your bargaining position is greatest before beginning work on a job. So, even with friends and relatives, make sure everyone understands and agrees to the details of the deal in advance.

Watch small expenses

I think this is what spurs him to recommend low cost index funds extends far beyond just investing advice.  Limiting your expenses in all areas of your life will extend the reach of your paycheck as well.

Limit what you borrow

 Mmh there you are, Buffet has never borrowed a significant amount of money. His advice is to become debt-free and then save some money to start investing. This is quite a bit different from all the gurus claiming that rich people get rich by using other people’s money.  I like this

Be persistent

Buffet claims that someone possessing persistence (and ingenuity) can win against a bigger and/or more established competitor.

Know when to quit

Sometimes, it is best to just cut your losses and walk away instead of throwing good money after bad. When you are down, resist the inclination to win it all back with the next bet.

Assess the risks

The article describes a situation where Buffet advised his son to imagine the worst-case and best-case scenarios for a certain course of action. This exercise will help you understand the risks and rewards for whatever decision you are making.

Know what success really means

The article claims that Buffet does not measure his success by dollars. Here’s an interesting quote from Buffet:  "I know people who have a lot of money," he says, "and they get testimonial dinners and hospital wings named after them. But the truth is that nobody in the world loves them. When you get to my age, you’ll measure your success in life by how many of the people you want to have love you actually do love you. That’s the ultimate test of how you’ve lived your life."


I really like what Buffet has to say about personal finances.

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