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