Warren Buffett is known by many as one of, if not the greatest, investors of all time. At age 8 he said he knew he would be an investor the rest of his life. He’s successfully grown his company, Berkshire Hathaway, into a giant success. One share is worth $310,230 as of August 13, 2018.
Read on for five key money tips from billionaire investor Warren Buffet.
1. Save Regularly and Pay Yourself First
As Warren Buffett said, “Do not save what is left after spending, but spend what is left after saving.”
Warren is a huge believer that people need to pay themselves first. If not, it’s easy to pay everyone else and forget about saving for yourself! Use automatic deductions to make sure you save or invest your money before you pay everyone else.
2. Live Below Your Means
Even though he is worth 70+ billion, Warren Buffett still lives in the same house he bought in Omaha, Nebraska for $31,500 in 1958!
The next time you get a raise or bonus, don’t increase your lifestyle and increase your budget. Otherwise, it just offsets your raise. If you start earning more but spending more you’re right back in the same position as before.
3. Learn to Make Passive Income
I love this quote from Warren, “If you don’t find a way to make money while you sleep, you will work until you die.”
It’s often said that the average millionaire has seven streams of income. You can’t always trade your time for money, you need to establish passive income streams to help you diversify and increase your income.
Here are three easy ways to create passive income:
- Invest in dividend stocks
- Publish a book or an e-book for continued royalties
- Create and sell an online course on something you’re knowledgeable about (this could be photography, sports, woodworking, etc.)
If you want to learn more about investing and creating passive income streams be sure to book a FREE consultation to learn more about our services.
4. Diversify Your Investments
When it comes to investing in the stock market, Warren’s advice to the majority of investors is simple:
Play The Long Game
Warren only invests in stocks that he plans to hold for a long time. He is the definition of investing for the long term and doesn’t believe in short-term trading.
Warren has always resisted fads and short-term investments. His rule is to only invest in companies that he understands how they make money. If you don’t understand how a company makes money, skip it or invest in the market with the S&P 500.
Invest in the S&P 500
By choosing to invest in the S&P 500 you are buying a fund that owns all 500 companies. By owning one share you are owning a piece of each company.
As he said in this CNBC interview, “Consistently buy an S&P 500 low-cost index fund. I think it’s the thing that makes the most sense practically of all time.”
5. Find Your Passion
Warren is a big believer in finding your passion. He said that at eight years old he knew he wanted to be an investor. Over seven decades later and he is still passionate about what he does every single day.
As he said “Without passion, you don’t have energy. Without energy you have nothing.”
Passion is the reason Warren is 88 years old and still works every day. To him, it doesn’t feel like work because he loves what he does and will do it forever.