Hey guys, today we are going to see the warren buffet 4 greatest lessons. If you are a beginner in stock investing and want to become the greatest investor like warren buffet then you are right place. because here I discuss the best 3 lessons in the field of investing that drive you towards creating great wealth in your upcoming future if you follow this lesson in the right way.
before going forwards with investing lesson let’s see how warren buffet created large wealth by investing in stock and how was their journey in the past.
The Richest man in the world
Do you know guys, warren buffet was in the top 10 richest men in the world list in 1993 then warren buffet’s net worth in 1993 is $8.3 billion. Now in 2022 warren buffet’s net worth is $117 billion.
The interesting fact is in a period of 30 years from 1993-2022 there are a lot of people who came and go from the top 10 list of the richest person in the world but warren buffet is always there in the top list of the richest person. warren buffet grows their wealth by compounding.
The most important fact is warren buffet did not get any money from his ancestors or family. It means he belongs to a middle-class family and struggled because of money in their childhood days. So, warren buffet decides to earn more money and he starts learning stock at the age of 10 years old.
At the age of 30, Warren buffet had become a millionaire. Up to the age of 21, they earned $20,000 from their job and some investment. After they focused more on investing and continuously growing their money and in the next 9 years, they become millionaires i.e., they earned between 21 to 30 age $9,80,000
let’s see the 3 investing lessons from warren buffet.
Warren Buffet lesson No 1-Generate Passive Income
The greatest quote from warren buffet “Find a way to make money while you sleep”
In the current digital world, inflation is going to increase year by year. So, if you want to achieve financial freedom as early as then you need to work on how can I generate passive income.
This term is very simple but most effective you have to find your ways of generating passive income.
Warren Buffet lesson No 2-Power of Compounding
This is a very simple fact or concept peoples ignore because it requires time. you know that warren buffet understood this concept from their childhood days. Compounding is the reason behind creating huge wealth for warren buffet. He always reinvested most of the profit in the stock to create great returns in long term.
The people who understand the power of compounding always make good money from them. As we know compounding effect does not get in the short term, after a certain time it pays off in a huge amount. So, you have to find good businesses and invest in them that will give multi-bagger returns in the future.
Read more- Rich dad poor Dad Money Lessons
Warren Buffet lesson No 3-Investment Strategy
Warren Buffett says that you have to see stock in a way that the ay company owners look.
just like the owner of the company who focuses on business and operations and long-term goals so he can earn more and more profit.
The same for investors have to focus on the company business, not on the stock price. Analyzing how company business will perform in the future.
for example, focusing on
1. how competitors are doing?
2. are you able to learn about business?
so, you can get some idea about that company.
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Warren Buffet Investing Strategy
Warren Buffet Investing Strategy
1. Business Tenets
It means the business of the company is simple to understand and performs good on year on year from the past and has the potential to grow in the future.
2. Management Tenets
The most important parameter of stock selection is the management of the company. You have to check the management of the company should be highly qualified and honest to the customers mean who always focus on creating value for their customers. If they provide value to the customers, it means shareholders automatically will get an advantage.
3. Financial Tenets
This is also an important part of research stock. you have to check company has debt or not. How much surplus amount a company has, net profits and many more financial parameters help to make good investment decisions.
Read more- how to build a stocks portfolio
4. Market Tenants
here you have to check the company’s intrinsic value. It means at this rate company’s stock price is undervalued or overvalued, you can compare its price to its earnings and other parameters. So, you get some idea about investing.
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