In today’s world of information overload, it’s not easy to tell ‘proven info’ from the useless.
For this reason, it’s best to seek advice from people who have proven to the world that they know what they’re doing.
Legendary value investor Warren Buffett is among the most famous examples of this. Let’s take a look at some investment rules that he lives by.
Plus, the real secret behind his riches.
Rule #1 – Use the 50-Year Rule
This rule is very simple to follow – only invest in something that will yield results for the next 50 years.
Buffett is famous for staying away from tech companies, due to the ever-changing technology which creates lots of uncertainty.
However, when he sees a company like Apple, which is clearly established and building value for the long-term he buys “big”.
Rule #2 – Don’t Lose Money
This is an obvious one, but it’s still one of the best known quotes from the business magnate.
His secret for doing this is looking for ‘margin of safety’ – i.e the difference between what somethings selling for and what he believes it’s real value is.
And, he also only buys businesses with “moats” i.e defensive barriers around them which makes them less vulnerable to competition.
– e.g. Apple has a ‘moat’ around it, because it’s very time consuming to switch to another brand.
Plus, you would effectively lose all your itunes songs!
That’s a real barrier to switching away – meaning customers are locked in virtually for life.
Rule #3 – Ensure the Highest Value at the Lowest Price
One of the most famous quotes from Warren Buffett is “price is what you pay, a value is what you get”.
When you learn the difference, you’ll be able to find the right things to invest in.
This will prevent you from overpaying for an investment and ensure greater success.
Rule #4 – Develop Healthy Financial Habits
Buffett believes that all behaviors are “habitual”. This means that having the ability to break bad habits and develop healthy ones is essential to success.
Your money habits need to be very well-developed. This means saving as much as you can by not spending on a useless thing and investing the money that you’ve saved.
Warren Buffett has lived in the same house for 50 years and wears old suits etc. – He preferred to spend his money on wealth producing assets than new mansions.
Although he did once splash on a corporate jet – which he appropriately called ‘The indefensible’ because it went against his well-known frugality!
Rule #5 – Try to Always Have a Lot of Cash Available
Warren Buffett made a fortune buying undervalued shares in the GFC because he had the money stockpiled to do so.
If you can have a good nest of money saved up, it means you can buy bargain assets at great prices.
Revealed: Buffett’s Real Secret of Getting Rich
Now, people think Warren Buffett got rich because he’s a great stock picker. Which is true to an extent.
However, the real secret to his wealth was being a businessman – he runs a hedge fund.
(The other secret is his use of ‘float’ as leverage, but that’s a topic for another day).
And the profits he made from running the hedge fund, he then reinvested in his fund – and turned into a lot more.
So yes, he’s an incredible stock picker – but he also had lots of money to invest because of the profits of his hedge-fund.
The 2 skills worked together to create a double whammy wealth producing effect.
The more money he made picking stocks for his clients, the more money he could invest in his own fund, and so it sent on.
And, this points to the secret of getting wealthy.
Step 1: Build/own a cash-generating business
Step 2 Invest in long-term wealth producing assets.
That’s my “financial plan” and it’s the “financial plan” of most self-made multi-millionaires I know.
Now, it’s true some high paid employees have been able to sock away enough money from their job to buy enough assets to become wealthy.
But, most average income earners are unable to.
That’s because there isn’t enough money left over after taxes and cost of living etc. to buy a significant asset base.
That’s why if you want to become wealthy, it’s so important to learn how to build a cash-generating business.
And, one great option is Amazon – in fact, over 140,000 people make over $100,000 per year in sales on Amazon.
That’s because not only can you list your product on their website – but they can also handle the warehousing, distribution etc. for you.
So virtually all you need to do is find the right product to sell. Now, here’s a webinar with a professional Amazon seller to help you get started the right way.
Check out this webinar, if you want to start your own cash-generating business, because Amazon makes it easier than ever before to make this a reality in as little as 90 days from now. Check it out.