Learning from the buff

Warren Buffett, arguably the best investor of all time, and still is at the ripe old age of 83. Probably the most famous Warren Buffett quote: ‘We simply attempt to be fearful when others are greedy, and to be greedy when others are fearful’ , or in my words, invest where others are not.

It is a pretty scary concept, but there is a lot to be learned from Mr Buffett. He views investing as a long term strategy and I couldn’t agree more. You should be in it for the long haul, and as a general rule, the higher reward you are looking for, the higher risk you need to put yourself in.

Investing isn’t a get rich quick trick or a pyramid scheme. With technology as efficient as it is, making a quick buck from the share market becomes increasingly difficult especially when you can’t invest the majority of your time into knowing more than everyone else.

So, what can we learn from Warren? Here are my top quotes from the man himself.

–       ‘You do smart things, you eventually get very rich’ – Well that sounds pretty good to me. We are faced with decisions daily, what we choose to do could be the smarter option, or the not so smart option. If you continually make smarter decisions in relation to budgets, investing and super etc, then eventually you will accumulate wealth. The same could be said will all aspects of life.

–       ‘It takes 20 years to build a reputation, and 5 minutes to ruin it. If you think about that, you’ll do things differently’ – This quote really opens my eyes to the idea of building reputation on a personal level but also in relation to investing. If you are smart and calculated, you will build your investment portfolio over years. If you do something silly, you can lose it in an instant.

–       ‘Someone’s sitting in the shade today because someone planted a tree a long time ago’  Thinking ahead. For you to retire in a comfortable position under a nice big tree, you actually need to take some action now, otherwise how will it grow? Same applies if you want to buy that dream house, start doing something about it now. Simple but true.

–       ‘Losing some money in an inevitable part of investing and there is nothing you can do to prevent it’ – There is no such thing as a risk free investment, period! Even cash has its risk.

–       ‘It is far better to buy a wonderful company at a fair price than a fair company at a wonderful price’ – Ok think about this one. I have definitely been told in the past about amazing, wonderful, cheap deals that are worth so much more than the asking price bla bla bla. If they were worth more, then someone would be paying more.

I get very suspicious of paying $50,000 for something that is apparently actually worth $100,000 but it is a fire sale and needs to be sold within the next 30 seconds. If something seems too good to be true, then in most cases it generally is. Investment is not based on a hunch; you need to educate yourself before taking a punt.

The buff has 1000 of these little gems but the above are my favourite, and I post these as a bit of food for thought really. You have to think about the long game when it comes to strategy and investments for your future and your wealth. There are no tricks, just basic economics, research, timing and smart decisions.

If you have any Buffett favourites, please feel free to share!

– This post is from our resident senior financial planner, Cara Brett. Check out her details in our about us page.

Posted in: Financial Planning and Cara Brett

About the author: Cara Brett

Cara Brett proudly heads up Bounce Financial - founded in 2014 after a successful, decade-long career in the financial services industry. Cara’s experience encompasses both the financial product and financial advice sides. This gives her a comprehensive and holistic knowledge of all facets of financial planning.