If you are a keen observer of the trends in the financial markets and the history of large scale success and failures of it, there is no way you won’t know the legend that Warren Buffet is today. The richest man in the world, he started buying stocks in Berkshire Hathaway when it cost around $ 7.50 and is the chairman of the company today, with one share of this company’s class-A stock coming close to $ 119, 000. Alice Schroeder, a writer, recently interviewed this most successful man of our times. Listed below are the ten ways or tips given by Warren Buffet, as given on his website, that he feels are essential for success so dive in and get rich more quickly:
1. Re-invest your profits
Don’t spend, just re-invest! This is Buffet’s motto in life. Early on in his life, Warren Buffet started ‘reinvesting’ with the little money he made in high school and step by step, venture after venture, he built enough capital to start buying.
2. Be Willing to be Different
A key to success is to do and do well what not everyone is doing. Buffet started collecting cash for these stock market investments from mid-1950’s and looked out for under-valued investment that didn’t attract as much attention as other high-value investments. However, this successful and carefully planned gamble played off and these investments ended up beating the market average by vast margins.
3. Never Suck Your Thumb
This is what Warren buffet calls procrastinating. He says that success comes not from thinking over things repeatedly; you should make quick decisions and not take so much time that you let the opportunity pass you by. Buffet makes his decision on the spot; when an offer comes to him he asks to be sent the price of the investment and gives his final word without losing anymore time.
4. Spell out the Deal Before You Start
It is very important, to use the legend’s words, to make clear what you expect from the deal and what you have to offer right at the start. It is right at the start of the deal that you have the most leverage to get the most out of it. Don’t get yourself into a deal and set what you want out of it at ‘negotiable’.
5. Watch Small Expenses
Save on little things as much as you can. Warren Buffet has been known for investing in businesses whose managers watch even the smallest expenses. It is with little things that you pave the way for greater management and it is, hence, very important to monitor the smallest of details in a business.
6. Limit What You Borrow
Warren Buffet realized the importance of this much before the economic recession taught it the hard way to people all across the world. Too much debt is never good for any venture. His personal experiences and those narrated to him have taught him that it is better to negotiate with your creditors, pay off what you owe them and then save enough to have back-up options.
7. Be Persistent
With great persistence, and ingenuity comes great success, Buffet feels. His embodiment of this principle is apparent in his acquisition of Nebraska Furniture Mart whose owner turned it from a pawnshop to the largest furniture shop in North America through persistence in underselling the big giants.
8. Know When to Quit
From his experience of losing all his weeks earning in betting on horses, Buffet learnt that even the risks you take have to be well-planned. As important as it is to take initiative, it is even more important to know when to stop and what risks not to take.
9. Assess the Risks
Stand outside the circle of the situation, assess the best and the worst-case scenarios and then act accordingly. This advice he gave to his son as well when the owner of his company was charged by FBI for price-fixing and he had to make the tough decision about whether it would be potentially beneficial to stay with the company.
10. Know What success Really Means
Success is a relative term; do not define it on the lines of what others think success is but on the basis of what success means to you. Success may not be an entirely monetary concept; you should judge success relative to what satisfies you. For Buffet, it doesn’t mean more money or hospital wings named after him but linking himself to charities in an anonymous manner. This is what being successful means to him at the end of the day.