WARREN BUFFET’ S TOP INVESTMENT STRATEGIES
1 Stick to what you know When it comes to investing, the best way to ensure you’ re not caught off guard is to invest in what you know. Buffett is a strong proponent of only investing in a business or industry that you can easily understand and explain.
2 Quality over quantity The quality of the business or asset type you are investing in is essential – more so than a seemingly great price. Rather than investing in“ bargain” stocks or real estate, ensure your investment is in good hands with a company earning consistently high returns.
3 Don’ t be afraid to commit It might seem daunting to commit to one investment, but Buffett has proven that this mentality pays off in the long run. If you’ ve invested in a high-quality opportunity, it will only increase in value in the long-term. As a result, your patience and loyalty will pay off.
4 Diversify … to a point Rather than investing in countless average opportunities, Buffet focuses on those that offer true value. While it might seem like a good plan to invest in a wide range of businesses, in reality this makes it more difficult to know if your investment is making you money.
5 Don’ t mind the noise The investment world is constantly bombarded with updates and breaking news regarding companies’ returns and behavior. While this information is of use, it needs to be viewed within a larger context. Rather than jumping along with everyone else in the market, remain focused on your strategy.
6 No easy solution There are countless so-called gurus out there, claiming to possess the necessary knowledge to make anyone an investment expert. While getting help from others is helpful, beware of these easy-fix solutions.
7 Stock price is not the same as value Buffett famously said,“ Price is what you pay. Value is what you get.” Rather than jumping on a bargain investment, look at the long-term earnings potential. The price of investing will fluctuate over time, but a quality investment shows consistent growth.
8 It’ s not about the adrenaline rush Contrary to what some may believe, investing isn’ t about the fast results. Rather, it’ s about finding investments that will increase in value over several years.
9 Don’ t try to time it The market is unpredictable at the best of times, making a strategy based solely on timing dangerous. Instead, follow Buffett’ s strategy by maintaining a consistent investment plan.
10 Listen to those you trust Choosing a partner or manager is an essential decision that could make or break your investment. Be very cautious when deciding whom to trust, being mindful of those who pretend to know how to become successful.
Think long-term Warren Buffett didn’ t make his fortune by being impatient. Rather, he committed to his investment strategy and ensured every business decision he made agreed with this. A famous quote states that“ If you aren’ t willing to own a stock for 10 years, don’ t even think about owning it for 10 minutes”. This philosophy is closely linked to the way in which Buffett and his company approaches new investments.
Of course, the property and stock markets aren’ t always comparable. Whereas the stock market is constantly being monitored, property value repercussions are less immediate. This offers us an opportunity to get in on the ground floor when it comes to new areas of interest. By being aware of local and global trends, you will be more likely to pick up on upcoming suburbs. When investing in property, it is essential to think about the long-term value of your property. With this in mind, however, it is important not to get caught up in the market value of a property. Instead, consider the income from your investment.
The trick, here, is to look for property that will gain value in the long term, while offering the opportunity for recurring revenue. A great way to achieve this is through renting. To take advantage of this opportunity, the aforementioned point regarding location is once again of paramount importance. In this way, you are able to capitalize on both the short and long term.
If you don’ t know, ask While Buffett may be a legendary name in the investment business, he didn’ t get there without depending on others. When investing, it is essential to stick to what you know. This doesn’ t mean that you can only invest in areas you’ re familiar with, but rather that you need to find ways to gain more access to that with which you’ re not.
Networking with other investors is essential, since this gives you access to information about other locations and their opportunities for capital gains. It may seem like common sense, but knowing the area
10 JUNE 2017 SA Real Estate Investor www. reimag. co. za