3 Lessons to Learn from Warren Buffett for Financial Success

If you are not sure where to get your financial advice, you could do much worse than Warren Buffett. The sixth richest man in the world, Buffett’s net worth stands at $96 billion, or 83 billion British pounds. According to the platform latenightStreaming.com, newbie investors can learn a lot by watching the documentary Becoming Warren Buffett, which chronicles the tycoon’s journey from a kid obsessed with numbers to one of the world’s richest men. “At 90 years of age, Buffett cuts a humble, grandfatherly figure. Make no mistake, however, this man does know how to make successful investments,” states the website.
Want to learn from the best? Here are a few lessons from the man many refer to as the “Oracle of Omaha.”
Spend Wisely
Unlike many other billionaires, Buffett does not feel the need to splurge his cash on fancy cars and huge mansions. Believe it or not, he still lives in a five-bedroom house he purchased in Omaha, Nebraska, for $31,500 way back in 1957. Instead of spending his money on non-essentials, Buffett invests it. The theory behind this strategy: For every dollar he spends on toys and gadgets, he is likely to lose his return on investment (and this can be 20 percent or more annually).
Take control of your living expenses and do not live above your means. Do you really need that car you will be paying off for the next ten years? Probably not. Take note, even successful people who leave beyond their means sometimes end up in bankruptcy.
Err on the Side of Caution
Buffett has said this over and over again: you should not be saying yes to investment opportunities as often as you say no. Many investments these days promise incredible returns in a short time. Should you believe them? Probably not. After all, it is not easy to deal with an investment mistake – whether it is in stocks, bonds, or property.
Do your research before investing, so you know exactly what you are getting yourself into. Never trust others to do the research for you. Read up on the company you are planning to invest in. Documents such as annual reports and SEC filings are a great start.
In Buffett’s own words: “I think you should read everything you can. In my case, by the age of 10, I’d read every book in the Omaha public library about investing, some twice. You need to fill your mind with various competing thoughts and decide which make sense. Then you have to jump in the water – take a small amount of money and do it yourself.”
Don’t Follow the Crowds
Buffett once famously said, “Be fearful when others are greedy. Be greedy when others are fearful.” This still holds true today. Fads are just that, fads, so it is probably best not to run with the herd and invest in the latest trends. Buffett says that fad investments are certainly not something you should be considering if you are looking for long-term value.
Instead, Buffett’s strategy is to buy when everyone is selling and sell when everyone is buying. In other words, to go against the grain. If you buy when everyone else is selling, you will be able to position yourself in quality companies at a fraction of the cost you would be forking if the market was strong.