“I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful.”
– Warren Buffett
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With an estimated fortune of $62 billion, Warren Buffett is the richest man in the entire world. In 1962, when he began buying stock in Berkshire Hathaway, a share cost $7.50. Today, Warren Buffett, 78, is Berkshire’s chairman and CEO, and one share of the company’s class A stock worth close to $119,000.
He credits his astonishing success to several key strategies, which he has shared with writer Alice Schroeder. She spend hundreds of hours interviewing the Sage of Omaha for the new authorized biography The Snowball. Here are some of Warren Buffett’s money-making secrets — and how they could work for you.
1. Reinvest your profits – this is the only way to take advantage of compound growth, which is money growing on money.
2. Be willing to be different – you follow the herd, you’re gonna get hurt. Going against the herd may be scary, but can pay off if done properly.
3. Never suck your thumb – If you find something good, act. Don’t sit around doing nothing.
4. Spell out the deal before you start – Get all the details in writing before you follow through.
5. Watch small expenses – The article mentions a guy who counted 500-sheet rolls of toilet paper to make sure he wasn’t being ripped off. That seems a bit extreme to me but I see the point of not wasting money.
6. Limit what you borrow – I believe that the only acceptable forms of debt are student loans, car loans (reasonable car loans), mortgages, and possible 0% deals that may pop up every once in a while. Now, don’t mistake that sentence to mean that I think it’s okay to have debt—that’s not what I’m saying. The main thing is to use debt as a tool and use it wisely.
7. Be persistent – Always remember the saying: “If at first you don’t succeed, try, try again.”
8. Know when to quit – You have to know when to say, “when.”
9. Assess the risks – Do some worst-case-scenario analysis before you proceed. In other words, count the costs before you begin.
10. Know what success really means – I love the fact that Buffett is not on an ego trip with his giving. According to the article, Buffett does not want any buildings named after him. That’s soooooo cool! I really respect that about him.