Warren Buffett’s 7 Best Investor Tips For Entrepreneurs
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Thinking of starting or investing in a business? Wonderful. Today we have some fabulous investor tips to help you.
Warren Buffett is a legendary business tycoon, philanthropist and investor, who recently celebrated his 88th birthday. He knows a thing or two about business and can teach us a lot about investing.
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Whether it’s investing in stocks, starting your own business, or buying a blog, these fabulous Warren Buffett investor tips apply to every entrepreneur.
Even small-scale and part-time investors can benefit from some of the lessons the billionaire investor has to offer.
Warren Buffett’s 7 Best Investor Tips For Entrepreneurs
Warren Buffett is probably the most famous investor of all time, making his $84.1 billion fortune investing in stocks.
The Oracle of Omaha is listed as the third richest person in the world (the second is former Microsoft founder Bill Gates, and the #1 richest person in the world is Amazon founder Jeff Bezos).
But Buffett doesn’t just make a ton of money, he gives a ton of it away, too. His largest charitable donation to date is to the tune of $37 billion.
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An examination of his life long career provides 7 of the best investor tips the professional investor can offer.
1. Nobody knows everything, so don’t be afraid to ask for help and advice
When Buffett buys a company, he doesn’t try to run it himself. He leaves the existing management in charge.
When he decided to become a philanthropist, Buffett didn’t start a foundation.
Instead, he simply turned the money over to somebody with a lot more experience in that field—his good friends, Bill and Melinda Gates.
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2. Buy companies that make money not stocks or business plans
This is the whole secret to Buffett’s Berkshire Hathaway empire.
Buffet buys good companies that make money and ignores what the market and others think about them. Trends and fast money making gimmicks are not part of his formula.
3. Cash is king
Buffett believes in cash and he keeps a lot of it around, buying companies that have a high cash flow.
Berkshire Hathaway currently has a free cash flow of $4.30 billion – that’s more than Google.
Having cash gives Buffett the freedom to make all those deals that astound the rest.
Having cash will also enable you to get through the hard times when others are drowning in debt.
4. Do your homework
Carefully research everything that you invest in. Buffett’s favorite pastime is reading corporate financial statements.
He scours them looking to see if companies actually make money. Read up on every investment before you buy.
5. Don’t be afraid to pay more to get a better investment.
In his 1989 letter to shareholders, Buffett famously wrote:
It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.
You’ll usually make money if you pay a little extra for a good investment.
If you only buy bargains, you’ll get what you pay for—a lot of second rate junk that doesn’t make money.
6. Stick to what you know, and if you don’t understand it, don’t buy it.
Buffett stays way from technology stocks because he doesn’t understand technology.
Instead, he buys companies in fields he knows a lot about such as railroads, consumer goods, and insurance.
If you don’t understand how an investment works or how a company makes money, stay away from it.
Instead, concentrate your investment on those industries or products you are familiar with.
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7. Think long term not short term.
Buffett has actually compared short-term market forecasts to poison. Many of his purchases, such as buying the Burlington Northern Railway, are long-term investments.
By thinking long term, Buffett can ignore the market and make money.
Warren Buffett’s 7 Best Investor Tips For Entrepreneurs – Conclusion
These investor tips aren’t just for billionaire investors like Warren Buffet.
Most of us could benefit from them, particularly when want to start a new business.
If you want to learn more, check out the many entrepreneur books that reprint Buffett’s many words of wisdom for investors.
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