Money Moves From Warren Buffett

Want to end 2016 with more money than you started it with? Here’s how.

http://www.inc.com/minda-zetlin/7-wise-money-moves-for-2016-from-warren-buffett-tony-robbins-and-other-experts.html

 

IMAGE: Getty Images

Will 2016 be the year you start building real wealth? It can be if you set your mind to it. Every year, the personal finance site GOBankingRates asks the world’s most famous financial experts for their tips for the coming year. Here are some of the best–which you can do no matter how much or how little money you have at the moment. Follow this advice and you’ll end 2016 with more money in the bank (or investments) than you have now.

These are the seven best tips from the full list on how to save money:

1. Never lose money.

This is one bit of wisdom that Warren Buffett likes to repeat. He puts it this way: „Rule No. 1: Never lose money. Rule No. 2: Never forget rule No. 1.“ What does this actually mean? Especially coming from the Oracle of Omaha, who has taken some fairly public losses on some very big investments himself–while remaining one of the most successful investors ever known?

Interpretations differ but I think it means to carefully consider the down side of any investment and to avoid investing in anything that doesn’t inspire high confidence in the value of the investment and that you don’t have a thorough understanding of. (This is why Buffett has often said he doesn’t invest in tech, and when he broke that rule by investing in IBM, he broke his rule about never losing money as well.)

2. Build a carefully balanced portfolio.

Angered by the losses ordinary people incurred due to banker misbehavior in the financial crisis, Tony Robbins went on a mission to learn what he could about finance from the best minds in the business. His advice is to create a mix of investments that adheres to the following four principles: Never lose money (see above); find investments which offers potential rewards that are greater than potential risks; create a tax-efficient portfolio so you get to keep your money instead of having to give it to the government; and diversify your investments. Do that, he says, and „you’re protected no matter what.“

3. Save. Any amount.

Bestselling author and analyst Whitney Johnson advises people to invest–no matter what. Even saving a few dollars a week can amount to a surprisingly large amount of money if you do it over many years. And to be safe in case of an unexpected financial setback, she says, you should have „at least six months of what you spend monthly in the bank. Period.“

4. Plan for how you’ll reach your financial goals.

Setting a financial goal is the easy part, says former Buffalo Bills wide receiver and personal finance author Chris Hogan. It’s like the difference between wishing you could go to the beach and loading up the car with towels and putting gas in the tank. „The necessity of a plan sounds simple, but it is the one thing that many people overlook when it comes to their money,“ he says. „And a dream without a plan is simply a wish.“

5. Negotiate everything.

Everything from your cable plan to your medical expenses can be negotiated, advises plainspoken financial expert Nicole Lapin, author of Rich Bitch. All it takes is a small investment of time and a little bit of guts.

„The worst thing they can say is no. And they usually won’t,“ she says. So, she advises, call all your providers right now and ask for better pricing. „It’s the best way to start a financially fabulous New Year.“

6. Stop spending your future wealth.

Yup, that Apple Watch is awfully tempting. But the more you give in to short-term splurges, the less wealth you’ll save in the long term, says financial coach and serial entrepreneur Josh Felber. For purchases large and small, consider whether you’d rather have that item right now or whether you can make do with something less expensive, older, or used, or something you already have.

„To create real wealth, you must quit spending your future wealth on goods and services that you want today, but deprive you of wealth long term,“ he says.

7. Learn about finances.

Don’t let someone else make the decisions about your money just because you feel like you can’t understand finance, advises Rich Dad, Poor Dad author Robert Kiyosaki.

„Don’t wait for the government, a financial adviser, or your boss to take care of you,“ he says. Instead, he says, become financially educated so that you can make informed decisions for yourself. „Take responsibility for your life and your future,“ he says. „Don’t give that right away.“

 

Warren Buffett’s 23 Most Brilliant Insights About Investing

http://www.businessinsider.de/warren-buffetts-investing-quotes-2014-8?op=1

Warren Buffett, the billionaire „Oracle of Omaha“ continues to be involved in some of the biggest investment plays in the world.

Buffett is undoubtedly the most successful investor in history. His investment philosophy is no secret, and he has repeatedly shared bits and pieces of it through a lifetime of quips and memorable quotes.

His brilliance is timeless, and we find ourselves referring back to them over and over again.

We compiled a few of Buffett’s best quotes from his TV appearances, newspaper op-eds, magazine interviews, and of course his annual letters.

Buying a stock is about more than just the price.

Buying a stock is about more than just the price.

YouTube/Coca-Cola

Coca-Cola is one of Buffett’s most successful investments.

„It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.“

Source: Letter to shareholders, 1989

You don’t have to be a genius to invest well.

You don't have to be a genius to invest well.

Associated Press

Albert Einstein

„You don’t need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beats the guy with 130 IQ.“

Source: Warren Buffett Speaks, via msnbc.msn

But, master the basics.

But, master the basics.

REUTERS/Eric Gaillard

„To invest successfully, you need not understand beta, efficient markets, modern portfolio theory, option pricing or emerging markets. You may, in fact, be better off knowing nothing of these. That, of course, is not the prevailing view at most business schools, whose finance curriculum tends to be dominated by such subjects. In our view, though, investment students need only two well-taught courses – How to Value a Business, and How to Think About Market Prices.“

Source: Chairman’s Letter, 1996

Don’t buy a stock just because everyone hates it.

Don't buy a stock just because everyone hates it.

YouTube

„None of this means, however, that a business or stock is an intelligent purchase simply because it is unpopular; a contrarian approach is just as foolish as a follow-the-crowd strategy. What’s required is thinking rather than polling. Unfortunately, Bertrand Russell’s observation about life in general applies with unusual force in the financial world: „Most men would rather die than think. Many do.“

Source: Chairman’s Letter, 1990

Bad things aren’t obvious when times are good.

„After all, you only find out who is swimming naked when the tide goes out.“

Source: Letter to shareholders, 2001

Always be liquid.

„I have pledged – to you, the rating agencies and myself – to always run Berkshire with more than ample cash. We never want to count on the kindness of strangers in order to meet tomorrow’s obligations. When forced to choose, I will not trade even a night’s sleep for the chance of extra profits.“

 Source: Letter to shareholders, 2008

The best time to buy a company is when it’s in trouble.

The best time to buy a company is when it's in trouble.

Reuters

„The best thing that happens to us is when a great company gets into temporary trouble…We want to buy them when they’re on the operating table.“

Source: Businessweek, 1999

Stocks have always come out of crises.

Stocks have always come out of crises.

AP Images

New York Stock Exchange, October 1929

Over the long term, the stock market news will be good. In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.“

Source: The New York Times, October 16, 2008

Don’t be fooled by that Cinderella feeling you get from great returns.

„The line separating investment and speculation, which is never bright and clear, becomes blurred still further when most market participants have recently enjoyed triumphs. Nothing sedates rationality like large doses of effortless money. After a heady experience of that kind, normally sensible people drift into behavior akin to that of Cinderella at the ball. They know that overstaying the festivities ¾ that is, continuing to speculate in companies that have gigantic valuations relative to the cash they are likely to generate in the future ¾ will eventually bring on pumpkins and mice. But they nevertheless hate to miss a single minute of what is one helluva party. Therefore, the giddy participants all plan to leave just seconds before midnight. There’s a problem, though: They are dancing in a room in which the clocks have no hands.“

Source: Letter to shareholders, 2000

Think long-term.

„Your goal as an investor should simply be to purchase, at a rational price, a part interest in an easily-understandable business whose earnings are virtually certain to be materially higher five, ten and twenty years from now. Over time, you will find only a few companies that meet these standards – so when you see one that qualifies, you should buy a meaningful amount of stock. You must also resist the temptation to stray from your guidelines: If you aren’t willing to own a stock for ten years, don’t even think about owning it for ten minutes. Put together a portfolio of companies whose aggregate earnings march upward over the years, and so also will the portfolio’s market value.“

Source: Chairman’s Letter, 1996

Forever is a good holding period.

„When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.“

Source: Letter to shareholders, 1988

Buy businesses that can be run by idiots.

Buy businesses that can be run by idiots.

screengrab from Dumb & Dumber

Dumb & Dumber

I try to buy stock in businesses that are so wonderful that an idiot can run them. Because sooner or later, one will.

Source: Business Insider

Be greedy when others are fearful.

Be greedy when others are fearful.

IMDB

„Wall Street: Money Never Sleeps“

„Investors should remember that excitement and expenses are their enemies. And if they insist on trying to time their participation in equities, they should try to be fearful when others are greedy and greedy only when others are fearful.“

Source: Letter to shareholders, 2004

You don’t have to move at every opportunity.

You don't have to move at every opportunity.

Brian Kersey / Getty Images

„The stock market is a no-called-strike game. You don’t have to swing at everything–you can wait for your pitch. The problem when you’re a money manager is that your fans keep yelling, ‚Swing, you bum!'“

Source: The Tao of Warren Buffett via Engineeringnews.com

Ignore politics and macroeconomics when picking stocks.

Ignore politics and macroeconomics when picking stocks.

REUTERS/Rebecca Cook

A car blows up on the set of „Red Dawn“ in Detroit, Michigan.

„We will continue to ignore political and economic forecasts, which are an expensive distraction for many investors and businessmen. Thirty years ago, no one could have foreseen the huge expansion of the Vietnam War, wage and price controls, two oil shocks, the resignation of a president, the dissolution of the Soviet Union, a one-day drop in the Dow of 508 points, or treasury bill yields fluctuating between 2.8% and 17.4%.

„But, surprise – none of these blockbuster events made the slightest dent in Ben Graham’s investment principles. Nor did they render unsound the negotiated purchases of fine businesses at sensible prices. Imagine the cost to us, then, if we had let a fear of unknowns cause us to defer or alter the deployment of capital. Indeed, we have usually made our best purchases when apprehensions about some macro event were at a peak. Fear is the foe of the faddist, but the friend of the fundamentalist.

Source: Chairman’s Letter, 1994

The more you trade, the more you underperform.

The more you trade, the more you underperform.

Wikimedia Commons

Isaac Newton

„Long ago, Sir Isaac Newton gave us three laws of motion, which were the work of genius. But Sir Isaac’s talents didn’t extend to investing: He lost a bundle in the South Sea Bubble, explaining later, “I can calculate the movement of the stars, but not the madness of men.” If he had not been traumatized by this loss, Sir Isaac might well have gone on to discover the Fourth Law of Motion: For investors as a whole, returns decrease as motion increases.“

Source: Letters to shareholders, 2005

Price and value are not the same

Price and value are not the same

REUTERS/Juan Medina

„Long ago, Ben Graham taught me that ‚Price is what you pay; value is what you get.‘ Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.

Source: Letter to shareholders, 2008

There are no bonus points for complicated investments.

There are no bonus points for complicated investments.

REUTERS/Vasily Fedosenko

„Our investments continue to be few in number and simple in concept: The truly big investment idea can usually be explained in a short paragraph. We like a business with enduring competitive advantages that is run by able and owner-oriented people. When these attributes exist, and when we can make purchases at sensible prices, it is hard to go wrong (a challenge we periodically manage to overcome).

„Investors should remember that their scorecard is not computed using Olympic-diving methods: Degree-of-difficulty doesn’t count. If you are right about a business whole value is largely dependent on a single key factor that is both easy to understand and enduring, the payoff is the same as if you had correctly analyzed an investment alternative characterized by many constantly shifting and complex variables.“

Source: Chairman’s Letter, 1994

A good businessperson makes a good investor.

A good businessperson makes a good investor.

REUTERS/Shannon Stapleton

Warren Buffett

„I am a better investor because I am a businessman, and a better businessman because I am no investor.“

Source: Forbes.com – Thoughts On The Business Life

Higher taxes aren’t a dealbreaker.

„SUPPOSE that an investor you admire and trust comes to you with an investment idea. “This is a good one,” he says enthusiastically. “I’m in it, and I think you should be, too.”

Would your reply possibly be this? “Well, it all depends on what my tax rate will be on the gain you’re saying we’re going to make. If the taxes are too high, I would rather leave the money in my savings account, earning a quarter of 1 percent.” Only in Grover Norquist’s imagination does such a response exist.“

Source: New York Times

Companies that don’t change can be great investments.

„Our approach is very much profiting from lack of change rather than from change. With Wrigley chewing gum, it’s the lack of change that appeals to me. I don’t think it is going to be hurt by the Internet. That’s the kind of business I like.“

Source: Businessweek, 1999

Time will tell.

Time will tell.

REUTERS/Pool/Sergei Chirikov

„Time is the friend of the wonderful business, the enemy of the mediocre.“

Source: Letters to shareholders 1989

This is the most important thing.

„Rule No. 1: never lose money; rule No. 2: don’t forget rule No. 1“

Source: The Tao of Warren Buffett

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