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9 Can’t-Miss Secrets Behind Warren Buffett’s Wealth

9 Can’t-Miss Secrets Behind Warren Buffett’s Wealth

Studying the success of investors like Warren Buffet is a cottage industry. A search for “Warren Buffet” on Amazon shows over 700 book titles. As one of the most successful investors in history, it makes sense to explore the principles and ideas he used to achieve his wealth. What characterizes Warren Buffet?

1. He Is A Dedicated Student of Investing

For investors simply looking to earn average returns, Buffet recommends investing in index funds (e.g. a popular type of index fund invests in the S&P 500 stock index). What if you want to join Buffet in seeking to very high returns, in excess of the market?

Be prepared to study and learn to follow in Buffet’s footsteps. Buffet’s study of investing goes back decades to his time as a student at Columbia when he studied with Ben Graham, author of The Intelligent Investor. Learning the details and methods of investing are the first secret of Warren Buffet’s wealth.

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2. He Stays True To His Principles Even When They Are Unpopular

Do you remember the “Dot Com” era of the late 1990s? From an investing standpoint, the Dot Com era was strange indeed. Many people bought shares in companies that had little revenue or profit. At that time, Buffet avoided these trendy investments. That decision led some to question his judgement. In 2001 BBC article, Buffet points that, “investors had been hypnotised by the staggering ascent of tech stocks and ignored everything else, including whether the businesses they were investing in were making money.”

3. He Improved His Communication Skills Through Training

In order to have money to invest, Buffet understood that he had to increase his income and professional skills. When he was in his early 20s, Buffet took the Dale Carnegie course to improve his speaking skills. To keep his skills sharp, he then took up a part time teaching role at the University of Omaha. Public speaking is a skill that most people can learn with practice and training.

4. He Reads For Hours Each Day

“I read 500 pages like this every day. That’s how knowledge builds up, like compound interest.” – Warren Buffet

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Daily reading is a key habit for Buffet as he seeks new information and opportunities. He reads far and wide: multiple newspapers each day, large numbers of financial reports on potential investments and books. For example, he reads The Wall Street Journal and Financial Times every day (his billionaire business partner Charlie Munger prefers The Economist).

Reading reports, books, newspapers and other material each and every day is much like compound interest. Over time, the knowledge he learns compounds and yields greater insights. Daily reading is a wealth secret that anyone can practice with the right discipline.

5. He Practices Value Investing Principles

“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.” – Warren Buffet

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There are many different investing approaches on the market: dividend investing, index fund investing, value investing, and so forth. Buffet’s approach is fundamentally based on the value investing principles developed by Ben Graham in the mid 20th century. According to Investopedia:

Value investing: The strategy of selecting stocks that trade for less than their intrinsic values. Value investors actively seek stocks of companies that they believe the market has undervalued. They believe the market overreacts to good and bad news, resulting in stock price movements that do not correspond with the company’s long-term fundamentals. The result is an opportunity for value investors to profit by buying when the price is deflated.

The great challenge lies in identifying the intrinsic value of a company and then having the courage to put your money on the line.

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6. He Builds Wealth Slowly

Unlike the technology entrepreneurs of today, Buffet earned his wealth slowly over many decades. Attempting to get rich fast is a recipe for disaster that tends to lead people to taking foolish risks.

7. He Limits Personal Indulgences

Buffet is well known for spending relatively little of his fortune. For example, he still lives in the same house in Omaha that he purchased in the 1950s. Buffet is an expert at resisting lifestyle inflation. After all, if he spent all of his fortune, there would be less available to invest.

8. He Knows His Limits

Despite the potential opportunities, Buffet has steered clear of investing in high technology companies. Why? Buffet argues that investing in innovations tends not to produce good returns. In a famous 1999 Fortune Magazine article, Buffet pointed out that the automotive industry was one of the most innovative developments of the 20th century, changing the daily life of millions of people. Yet, a very large portion of American automobile companies have disappeared – a fact that should give pause to investors. Given the difficulty of successfully investing in innovative companies, Buffet tends to avoid them.

9. He Started Earning Money As A Teenager

Growing up, Buffet was determined to earn money. When he was seventeen years old in 1947, he earned $5,000 delivering newspapers (equivalent to $52,000 in 2013 income terms according to Measuring Worth). Making money and managing money effectively are skills that take time to develop. Buffet did himself a favor by starting young

Featured photo credit: Dollars/RabidSquirrel via pixabay.com

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Bruce Harpham

Bruce Harpham is a Project Management Professional and Founder and CEO of Project Management Hacks.

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Last Updated on June 26, 2020

25 Easy Tips on How to Save Money Fast

25 Easy Tips on How to Save Money Fast

“How to save money fast?” This is the question asked by all of us not in the top 1% of rich people.

If you are looking for ways to drastically reduce your expenses immediately, first look at what you need to spend money on every week. And I mean really need.

You don’t really need to order in food. You don’t really need to buy expensive perfume.

Building from that, you can work out how your regular expenses can be reduced.

As for irregular expenses, they can also be deceptively costly in the long run. Once-off buys can also be tackled with some prudent planning and a little extra research.

And remember: a budgeted lifestyle does not mean a bad or boring one!

But first, understand what budget you can cut down on daily:

  • Regular expenses for the average adult (can be trimmed but not eliminated):
    • food
    • rent/mortgage
    • cell phone
    • insurance
    • socializing/entertainment
    • transportation
    • hygiene products
    • household bills
  • Irregular expenses for the average adult (can be eliminated or cut down a lot):
    • travel
    • clothing
    • medication (*depends)
    • grooming (hair, nails etc.)
    • gifts

Now, let’s dive right into the 25 ways to save money fast:

Save Money on Food

1. Bring a stock of food to the office/work

Instead of popping out for an overpriced salad and a smoothie, leave a set of basic utensils at the office as well as a stock of non-perishable goods such as tinned fruit, tuna, rice crackers and so on (try to avoid the junk food and this can turn into a pretty great diet!).

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Stocking up means you won’t forget or say “I didn’t have the time” when you rushed out to work in the morning.

2. Buy the store-brand version

Many basic foods, such as bread and milk, will taste exactly the same as their branded alternatives. Go for stuff with minimal additives and preservatives. Meat in a tube is probably insanely unhealthy!

3. Eat cheaper cuts of meat

Learn how to tenderize and flavour cheaper meat and fish, and save on the (typically) most expensive item on your grocery bill.

4. Have group dinners

If 10 friends put $5 each in the kitty, it’s pretty easy to make a giant lasagne and get refreshments, as well as hang out with your favourite people.

Save Money in Transport

5. Get a bicycle

Save on gas money and bus/metro fares with this underrated mode of transport.

6. Use public transport and/or don’t get taxis

Some places can only be reached by car. But as a good practise, check your public transport website and see if any routes pass nearby where you need to get to. Walk as much as you can.

7. Find the cheapest gas

Regularly check out where the cheapest gas can be bought.

Save Money in General Shopping

8. Shop online

Not only will you save on the gas or transport fares from going to the shopping mall but you will also find better deals

9. Sell your old stuff

Get your unwanted belongings up on eBay ASAP and earn a few dollars.

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Here’re more ideas for you: 25 Things to Sell to Make a Lot of Money

10. Bulk buying stores

For regular non-perishable/slow perishable purchases such as toilet paper, cat food, pasta, washing powder and so on, do an epic stocking-up trip to a co-op or equivalent (my mum used to go to a place that restaurants buy from).

Be wary of supermarket “deals”, as some have been found to be fraudulent after working out a simple calculation.

11. Become a flea market/car boot sale/street market guru

You can find original gifts and develop good negotiation skills at these places.

12. Generic brand medication

More often than not, the generic version of paracetamol and other basics work the same as the branded version.

13. Choose deodorant, not perfume

It blows my mind when someone drops $70 on a bottle of spray. Stick with a nice deodorant, and not only will you smell just fine but you’ll be sweat-free as well!

Cut Down on Household Expenses

14. Printing

Ink is one of the most expensive substances in the office and coloured ink is doubly so. B

e more efficient and choose black and white, and if your printer doesn’t have a print-both-sides options, just print odd pages first, re-insert the paper and print even pages.

Expand the margins of what you are printing as often as you can to save on paper.

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15. Minimize SMS and phone calls

A combination of a free chat service such as WhatsApp and a free call service such as Skype can reduce your bill to nothing (so long as you have a decent Wifi connection).

16. Shop around for insurance

Most people don’t spend enough time searching for the best insurance deal.

Keep a watchful eye out for deals and new competitors in the market.

17. Try re-negotiating your rent/mortgage

If you have built up a good credit history or a good rapport with your landlord, then chances are a frank chat about needing to tighten your spending could result in lowering your payments. You’ve nothing to lose from trying.

18. Don’t get a TV

Invest in a computer/laptop and an internet-only package. You can watch more (and often better) entertainment on the web, and skip the advertisements as well.

19. Pool your internet bill with a neighbour

My apartment building is basically a big old house split into three apartments. There are five of us in total. We pool the internet bill, making it crazy cheap.

Save Money in Socializing, Entertainment And Travel

20. Have house parties

Instead of paying for overpriced drinks, set up a series of in-house get-togethers with your friends. Everyone takes a turn, so it’s not always your house that needs cleaning.

For sound insulation, hang heavy drapes on the walls and windows. For music, invest in a good second-hand set of speakers which you can connect to your computer. Let Spotify or Grooveshark playlists do the rest.

21. Open festivals, meetups and events

It never fails to surprise me how much underground stuff goes on around me for free or for very cheap. Find out who runs the blogs and websites that list all the less well-known cultural activities.

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22. Volunteer

If you can’t pay for a ticket, volunteer and get to be there anyway.

23. Housesit

There are multiple housesitting websites offering you the possibility to avoid paying hotels and skip the discomfort of crummy hostels.

Save Money on Hygiene and Beauty

24. DIY beauty

French manicures, pedicures, waxing, eyebrows… pretty much all of these can be achieved at home (and done well) with some practise. There are plenty excellent blogs and YouTube tutorials to help.

25. Fewer haircuts/volunteer at a trainee hairdresser

If you can’t bear the risk of a trainee touching your locks, learn more ways to manipulate your hair as it grows and get haircuts sparingly. Women’s haircuts are outrageously priced in many cities.

Bonus: Effective Money-Saving Tips for Everything

Here’s a summary of what you can generally do to save more money:

  • Share/pool resources. Organize a neighbourhood sharing scheme, common resources for your apartment block or with your friends. Not everybody needs an individual lawnmower.
  • Buy energy-saving everything. The easiest way to lower your bills – replace those lightbulbs!
  • Buy in bulk. Be sensible about it (i.e. make sure you have space!), and drastically reduce weekly expenditure.
  • DIY. Skill up using YouTube tutorials on plumbing and many other essential services so you never have to pay for simple problems again.
  • Research a lot before making a decision. Most money-wasting is the result of poor preparation and planning. Don’t shirk this part just because you don’t like it!
  • Use your network. Your network is full of resources that can ease the pain of budgeting. Ask for help.
  • Stop and think. Do I really need it?

Unfortunately, there are some things that require plain ol’ giving up for the time being. This can include high-cost sports such as skiing, the latest versions of some technologies, the finest brands of food/drinks, premier seats at the opera and most other indulgences.

What is important to remember during lean times is that when you look back on your life, it will be the experiences that stand out, not the extra comforts.

Living on a budget can teach you a lot about how much you can really get out of your paycheck. We only live one life, so make the most of every penny you earn!

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Featured photo credit: Unsplash via unsplash.com

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