The Berkshire Hathaway have come out with its annual letter and it have further strengthens the Warren Buffett teachings on how to invest in the stock market. The company has reported a jaw-dropping return of 163% over the past half century and an average annual gain of 21.6% compared to 9.9% for the S&P 500. One can’t be like Warren Buffet but can definitely use Warren Buffett to become rich.
Following Warren Buffett Advice Can Make You Rich:
America’s best days lie ahead
Buffet have signaled that the America best days are going to come and it’s a best time to invest for a long term
Over a longer term, stocks are not at all risky
Sure, stocks can take you on some scary rides. Bad years with losses of 10% or 20% come around often enough. Specific stocks you own might go to zero if you were really speculating. But Buffett spends some time telling investors not to mistake those ups-and-downs with risk, provided you build a diversified portfolio of established companies and are saving for the long term.
Don’t listen to experts’ advice
: According to Buffet, “Anything can happen anytime in markets. And no advisor, economist, or TV commentator can tell you when chaos will occur. Market forecasters will fill your ear but will never fill your wallet”
Focus on capital preservation
Majority of investor’s measure performance solely based on returns. Buffett advices that you should not strive to make every dollar a potential profit which involves too much risk. Instead you should be loss-averse. Thus, preserving capital should be top goal and by avoiding losses you’ll naturally be inclined towards investments with assured returns
Be tax savvy
One should have knowledgeable about tax laws and use them to their advantage. Also, one should understand tax implications of an investment prior to making it as it can significantly impact the return on investment. For e.g. investment might give you 9% returns but due to its taxable nature, if you are in the 30% tax-bracket, return will fall to just a little above 6%.
No matter how simple may it sound but one should follow it with full dedication as Warren Buffet advice can make you rich by generate above average return from investing in the market.