Never lose money

One of Buffett’s main tips to keep in mind: “Rule No. 1: Never lose money. Rule No. 2: Never forget rule number 1.” The more you miss, the harder it will be to get back to where you started. And if you are in the red, you have to forget about reaping benefits.

Buy something expensive at a low price

In his 2008 letter to the shareholders of Berkshire Hathaway, his parent company, Buffett shared another principle: “Price is what you pay for, value is what you get.” We lose money by paying a price that doesn’t match the value you get from something, like high-interest credit card debt or spending on seldom-used items, he said.

Instead, he bets on living modestly, waiting for opportunities to get more value at a lower price.

Healthy habits with money

In a speech given at the University of Florida in 2007, Buffett stressed that most of our behavior is driven by inertia, by the habits we have. “These are chains that are too light to weigh, but that can be too heavy to want to break them.” Therefore, the best advice is to have positive habits, avoiding those that make a hole in our wallet.

Avoid debts

If it is interest, let it be what your investments generate. “I’ve seen so many people fail because of alcohol and borrow money…”, he said in 1991. “You don’t really need to ask for that much.

The focus of attention is always on credit cards. He advises avoiding them entirely. The tycoon believes that “interest rates are too high.” “Sometimes they are 18%. Sometimes 20%. If he borrowed money at 18% or 20%, he would be broke.

Have cash on hand

Always have cash and liquidity on hand. Buffett takes advice to another level. “We always have at least 20,000 million in liquidity,” he acknowledged in 2014. Is it that important? For the investor yes. “Liquid money is for a business the equivalent of oxygen for people: you don’t realize it’s there until it’s gone.” “When you have to pay bills, the only thing that counts is cash,” he warns. “Don’t leave home without cash,” he says.

I invested in you

Buffett said that you have to invest in yourself as much as possible. “You are your greatest asset, by far,” he once noted. “Anything you do to improve your talent and become more valuable will be rewarded with better buying power.”

It’s worth it? It looks like it is.  And an added point is that knowledge cannot be taxed or stolen. It is safe in every brain.

learn about money

The bulk of the above advice on investing in ourselves should be learning about money management. It is still what everything revolves around. Much of Buffett’s work involves limiting exposure and minimizing risk. Regarding the second, he affirms that they come because “you don’t know what you are doing.” The more one knows about finances, the more security when investing.

Trust index funds

Index funds invest in the assets that make up an index, such as the Ibex 35 or the S&P 500. Buffett recommends that the average investor invest in these funds. The idea is that the stock market is always going up in the long term. And since the index affects the behavior of the market, you win.

Return

“If you are in the luckiest 1% of humanity, you should think of the other 99%.” In this sense, as a member of this small group, Buffett applies the story. Along with Microsoft co-founder Bill Gates, he launched The Giving Pledge, a promise made by more than 100 billionaires to give away part of their fortune.

See money as something long term

“If someone is sitting in the shade today it is because someone else planted a tree a long time ago.” Planting and nurturing the seeds of financial success now will bring a shadow to be enjoyed later. A shadow in the form of zero debts, a secured retirement, being able to pay for our children’s university…

The billionaire calls for investing thinking of “a horizon of several decades.” Run away from quick wins. The idea is to win throughout our life. Nor does he recommend getting carried away by the fluctuations of the market, its volatility.

Building true security around our wealth takes time. And in difficulties, the best thing is to stay strong. That is the basis.

What are the 10 tips for a successful long-term investment?

While there is uncertainty in the stock market, certain testing principles can help investors increase their chances of long-term success.

Some investors lock in profits by selling their valued investments while holding on to underperforming stocks, hoping for a return. But good stocks can go higher, and bad stocks risk disappearing altogether.

key takeaways

• The stock market is plagued with uncertainty, but certain testing principles can help investors increase their chances of long-term success.
• Some of the most important basic investing tips include selling to winners and losers; avoiding the temptation to follow “hot tips”; resist the pull of penny stocks; and then pick a strategy that sticks with it.
• If your schedule allows it, a focus on the future with an eye on long-term investing can maximize returns for the vast majority of any investor.

Understanding successful long-term investing

Trip winner

Peter Lynch spoke of “tenbaggers”: investments that have increased tenfold in value. He attributed his success to a small number of these shares in his portfolio.

But this required the discipline to hold on to shares even after they had risen by many multiples, if you thought there was still significant upside potential.Bring: Avoid adhering to arbitrary rules and think of an action on its own merits.

Selling a loser

There’s no guarantee that stocks will decline after a prolonged slump, and it’s important to be realistic about the prospect of underperforming investments. And while acknowledging stock loss can signal psychological failure, there’s no shame in acknowledging mistakes and selling investments to avoid further loss.

In both cases, it is crucial to judge companies on their merits, to see if the price justifies future capacity.

Don’t worry about the little things

Rather than panic about short-term investment moves, it’s better to keep track of the big picture. Have confidence in the broader investment scenario and don’t risk short-term volatility.

Don’t overemphasize the difference that a few cents could prevent you from using a limit vs. a market order. Certainly active traders use minute to minute fluctuations to lock in profits. But long-term investors succeed based on time periods that last for years or longer.

Don’t Follow Hot Tip

Regardless of the source, never accept a stock crop as valid. Always do your own analysis of a company before investing your hard-earned money.

Sometimes tips do come out, depending on the trustworthiness of the source, but deep research is needed for long-term success.

Pick a strategy and stick with it

There are many ways to choose stocks and it is important to adhere to a philosophy. Switching between different types of approaches makes you a market timer, which is a dangerous endgame.

Consider how the investor stuck to Warren Buffett’s adherence to his value-oriented strategy and how he rode out the dotcom boom of the late 1990s, avoiding huge losses as a result when tech startups failed.

Don’t overemphasize the P/E ratio.

Investors tend to put a high value on price-earnings, but it’s wise not to put too much emphasis on metrics alone.Therefore, a low P/E ratio does not necessarily mean that a security is valued, and a high P/E ratio does not necessarily mean that a company is overvalued.

Focus on the future and keep a long-term perspective

Investing requires making informed decisions based on what has not yet happened. Data from the past can indicate things to come, but it is never guaranteed.

In his 1989 book “One Up on Wall Street,” Peter Lynch said, “If I wanted to ask myself, ‘How can this stock go up?’ I would never buy a Subaru after twenty years. But I checked the basics, realized Subaru was still cheap, bought the stock, and did it seven times after.”It is important to invest based on future potential versus past performance.

While big short-term gains can often attract market neophytes, long-term investment is essential to your success. And while active short-term trading can bring you profit in trading, it involves more risk than buy-and-hold strategies.

Be open

Many great companies are last names, but many good investments lack brand awareness. Additionally, thousands of smaller companies have the potential to become the star names of tomorrow. In fact, small-cap stocks have historically outperformed their large-cap counterparts.

From 1926 to 2017, small-cap stocks in the US returned an average of 12.1% and the Standard & Poor’s 500 Index (S&P 500) returned 10.2%.

That’s not to say you should spend your entire portfolio on small-cap stocks. But there are many more excellent companies than those of Dow Jones Industrial Media (DJIA).

Oppose Penny Stock Lure

Some mistakenly believe that low-priced stocks have less to lose. But if a stock falls from $5 to $0, or a $75 stock does the same, you’ve lost 100% of your initial investment, so both stocks have similar downside risk.

In fact, penny stocks are more likely to be riskier than higher-priced stocks, as they tend to be less regulated and often much more volatile.

Worry about taxes but don’t worry

If taxes are put above all else, investors may make the wrong decisions. While the tax implications are important, they are secondary to safely investing and growing your money.