{"id":19067,"date":"2022-11-07T09:00:08","date_gmt":"2022-11-07T08:00:08","guid":{"rendered":"https:\/\/my-life.lu\/?p=19067"},"modified":"2023-08-30T12:02:03","modified_gmt":"2023-08-30T10:02:03","slug":"finances-what-we-can-learn-from-warren-buffet-30111","status":"publish","type":"post","link":"https:\/\/my-life.lu\/en\/finances-what-we-can-learn-from-warren-buffet-30111\/","title":{"rendered":"Finances: what we can learn from Warren Buffet"},"content":{"rendered":"<div id=\"playht-iframe-wrapper\" style=\"max-height: 210px !important;\">\n\t<iframe\n\tscrolling=\"no\"\n\tclass=\"playht-iframe-player\"\n\tid=\"playht-iframe-player\"\n\theight=\"90px\"\n\twidth=\"100%\"\n\tframeborder=\"0\"\n\tstyle=\"max-height: 90px; height: 90px !important;\"\n\tsrc=\"https:\/\/play.ht\/embed\/?article_url=https:\/\/my-life.lu\/en\/?p=19067&voice=en-GB-SoniaNeural&appId=fiFJxxWiUV3tImG&trans_id=-NFDrsEPtxGksVJj-jxE\"\n\tdata-voice=\"en-GB-SoniaNeural\"\n\tarticle-url=\"https:\/\/my-life.lu\/en\/?p=19067\"\n\tdata-appId=\"fiFJxxWiUV3tImG\"\n\tallowfullscreen=\"\">\n\t<\/iframe>\n<\/div>\n<p class=\"entete\">The recommendations of experts are always helpful when it comes to growing your investments and improving the state of your finances. And as Warren\u00a0Buffet is the undisputed reference on such matters, myLIFE has pulled together his most enlightening quotations. Help yourself, it\u2019s free!<\/p>\n<p>Warren\u00a0Buffet is a US businessman, investor and billionaire, who is also well-known for the vivid descriptions he uses so often when talking about finance. myLIFE has chosen a few of his most famous quotations to illustrate certain principles when it comes to investment and finance. Understanding and applying these will undoubtedly help you to progress in these fields.<\/p>\n<p>But firstly, we must emphasise the fact that there is no magic formula for successful investing, and no single principle that will make all the difference. The aim of this article is not to tell you what to do, but to give you the tools to improve your investment strategies and to fine tune the way you manage your finances.<\/p>\n<h2 id=\"h2_0\" >1. \u201cPrice is what you pay. Value is what you get\u201d<\/h2>\n<p>Warren\u00a0Buffet generally invests his money in companies that he considers undervalued, but which he believes have major growth potential. If he\u2019s right, the price paid is therefore below the real value of his purchase. It\u2019s largely thanks to this\u00a0<a href=\"https:\/\/my-life.lu\/en\/what-are-value-stocks-30093\/\" target=\"_blank\" rel=\"noopener\"><strong><u>value investing<\/u><\/strong><\/a> approach that he has amassed his fortune. This is based on the assumption that bargains can be had by acquiring shares that are undervalued. This is certainly not the same thing as paying a low but appropriate price in the hope of seeing the company\u2019s value rise at some point.<\/p>\n<p>Of course, the key is to find out why the shares are undervalued in order to establish whether or not an investment is advisable. A low price is not necessarily a reason to rush in. Don\u2019t blindly follow <a href=\"https:\/\/my-life.lu\/en\/investments-beware-of-first-impressions-30104\/\" target=\"_blank\" rel=\"noopener\"><strong><u>your first impressions<\/u><\/strong><\/a>\u00a0; take plenty of time to analyse the company\u2019s fundamentals. You will generally need the help of a specialist for this.<\/p>\n<h2 id=\"h2_1\" >2. \u201cMost people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can\u2019t buy what is popular and do well\u201d<\/h2>\n<p>Do as the illustrious investor does and exercise your discretion \u2013 don\u2019t take a flattering article at face value and avoid <a href=\"https:\/\/my-life.lu\/en\/investments-you-are-not-a-sheep-30069\/\" target=\"_blank\" rel=\"noopener\"><strong><u>following the herd<\/u><\/strong><\/a>. If everyone is rushing into the same type of assets, it\u2019s probably too late to get involved. Instead, it\u2019s probably the right moment to look at other asset classes that have been neglected and may be particularly interesting. Fads often results in speculative bubbles, which can have unfortunate consequences. But be careful, because it\u2019s not easy <a href=\"https:\/\/my-life.lu\/en\/investments-is-it-possible-to-be-right-on-your-own-30080\/\" target=\"_blank\" rel=\"noopener\"><strong><u>to be the only one who is right<\/u><\/strong><\/a> either. Don\u2019t assume that it must be a good idea just because no one is talking about it. Before making a hasty decision, have a chat with your <a href=\"https:\/\/my-life.lu\/en\/sound-investment-you-are-the-key-30001\/\" target=\"_blank\" rel=\"noopener\"><strong><u>banker, who can offer guidance<\/u><\/strong><\/a>, and consider their recommendations before making up your own mind.<\/p>\n<blockquote><p>Ready to invest? It\u2019s better to invest your capital in an industry where you know the companies.<\/p><\/blockquote>\n<h2 id=\"h2_2\" >3. \u201cIf you don\u2019t know the jewellery, know the jeweller\u201d<\/h2>\n<p>Ready to invest? It\u2019s better to invest your capital in an industry where you know the companies. If you do your research in advance, you can verify the momentum and financial health of those companies. Once this is done, you will know what you are getting into and can make an informed decision.<\/p>\n<p>This also implies that it\u2019s not possible to be an expert in everything, so it\u2019s better to focus on areas where you are able to reach an informed opinion. And if you\u2019re thinking of leaving your comfort zone in order to diversify, it\u2019s always preferable to surround yourself with experts in the field.<\/p>\n<h2 id=\"h2_3\" >4. \u201cBe fearful when others are greedy, and greedy when others are fearful\u201d<\/h2>\n<p>Don\u2019t follow the latest trend, remain curious and on the look-out for opportunities \u2013 these are just some of Warren\u00a0Buffet\u2019s secrets on how to get rich! No one knows what the future will hold, or which sectors will hold up best in future periods of turbulence. When investing, don\u2019t automatically follow the pack. After all, <a href=\"https:\/\/my-life.lu\/en\/investments-is-it-possible-to-be-right-on-your-own-30080\/\" target=\"_blank\" rel=\"noopener\"><strong><u>\u201cthe crowd is not always right\u201d<\/u><\/strong><\/a>. Doing the same thing as everyone else is no guarantee of making the right choice.<\/p>\n<p>According to Buffett, humans are naturally irrational and act accordingly. Following a trend may lead to disaster. Swimming against the current (for example, buying when everyone is selling in a falling market) is sometimes proof of rational behaviour. The message here is not that you should take an opposing view to everyone else as a matter of principle, but do try to avoid slavishly follow the dominant trend and be aware that following the pack is not without risk.<\/p>\n<blockquote><p>Sticking to a long-term vision is the key to investment.<\/p><\/blockquote>\n<h2 id=\"h2_4\" >5. \u201cOnly buy something that you&#8217;d be perfectly happy to hold if the market shut down for 10 years\u201d<\/h2>\n<p><a href=\"https:\/\/my-life.lu\/en\/successful-investment-depends-on-a-long-term-strategy-30084\/\" target=\"_blank\" rel=\"noopener\"><strong><u>Sticking to a long-term vision<\/u><\/strong><\/a> is the key to investment. Warren Buffet takes a long-term approach to selecting and growing his investments, and is wary of focussing on cyclical developments. Rather than focusing on the short-term opportunities in a share, he focuses on the fundamentals (the company\u2019s capacity for innovation and profitability improvements). And he\u2019s happy to admit, \u201cOur favourite holding period is forever\u201d. We wouldn\u2019t go so far as to encourage you to invest your money indefinitely or never to sell assets, but investing over a time horizon of at least several years will give you greater peace of mind when dealing with periods of crisis in the hope of ultimately <a href=\"https:\/\/my-life.lu\/en\/why-should-you-invest-over-the-long-term-and-how-30037\/\" target=\"_blank\" rel=\"noopener\"><strong><u>achieving a better return<\/u><\/strong><\/a>.<\/p>\n<p>This quotation also implies that it isn\u2019t wise to speculate or try to find the deal of the century. It\u2019s better to invest in the real economy: specifically, in things that match your values, projects and <a href=\"https:\/\/my-life.lu\/en\/what-type-of-investor-are-you-30008\/\" target=\"_blank\" rel=\"noopener\"><strong><u>investor profile<\/u><\/strong><\/a>.<\/p>\n<h2 id=\"h2_5\" >6. \u201cRisk comes from not knowing what you\u2019re doing\u201d<\/h2>\n<p>Improvisation is not a good approach to investment. The more you find out about a subject, the better equipped you will be to make the right decisions. This is obvious, but Buffet believes this often goes out of the window with investors who have had some success. He recommends keeping a cool head, getting to know the rules of investment and the reality of the company that you are considering. It\u2019s also useful to draw some lessons from the experience of other investors or, in other words, to improve your understanding of the market. It\u2019s advisable to surround yourself with experts in order to access the best information, and we can\u2019t emphasise enough how important it is to take responsibility <a href=\"https:\/\/my-life.lu\/en\/financial-education-almost-everything-is-learned-before-age-seven-55511\/\" target=\"_blank\" rel=\"noopener\"><strong><u>for the financial education of your children<\/u><\/strong><\/a> as soon as possible. You can also take a look at sites like myLIFE, which focus on financial education.<\/p>\n<p>In any event, never forget that unless you do your research, you are not investing but gambling.<\/p>\n<h2 id=\"h2_6\" >7. \u201cNever depend on single income. Make investment to create a second source\u201d<\/h2>\n<p>Whether you\u2019re trying to <a href=\"https:\/\/my-life.lu\/en\/understanding-inflation-51061\/\" target=\"_blank\" rel=\"noopener\"><strong><u>cope with inflation<\/u><\/strong><\/a> or build up a nest egg to plan for your retirement, sometimes your salary may not be enough. The US billionaire offers a solution \u2013 investment! If all goes well, this option will enable you to gradually create a second source of income that may be much larger, and to be less dependent on your professional income. This requires some patience of course, but it\u2019s the road to take if your aim is to one day achieve <a href=\"https:\/\/my-life.lu\/en\/on-the-road-to-financial-freedom-51063\/\" target=\"_blank\" rel=\"noopener\"><strong><u>financial independence<\/u><\/strong><\/a>.<\/p>\n<h2 id=\"h2_7\" >8. \u201cCredit cards are not your friends\u201d<\/h2>\n<p><a href=\"https:\/\/my-life.lu\/en\/the-benefits-you-didnt-know-your-credit-card-had-50011\/\" target=\"_blank\" rel=\"noopener\"><strong><u>Credit cards<\/u><\/strong><\/a> are widespread, as they are easy to use and offer many advantages. However, they also entail a number of risks, such as <a href=\"https:\/\/my-life.lu\/en\/avoiding-over-indebtedness-50008\/\" target=\"_blank\" rel=\"noopener\"><strong><u>over-indebtedness<\/u><\/strong><\/a>, in certain circumstances. This isn\u2019t about denigrating credit cards \u2013 they are a valuable and useful tool, provided you don\u2019t use them to spend recklessly and put a hole in your finances. Credit cards offer a means of deferring payment, not a magic wand to cover your spending sprees. Warren Buffet is here issuing a reminder that credit can be a useful servant in certain circumstances, but it is a dreadful master.<\/p>\n<h2 id=\"h2_8\" >9. \u201cCash combined with courage in a time of crisis is priceless\u201d<\/h2>\n<p>If you spot an unbelievable opportunity in the market, you need two things to take advantage of it \u2013 the financial means and courage. With this combination, you may be able to trade profitably for your portfolio. Risk is obviously the trade-off when you take a decision. If there were no risk involved, there would be no need for courage. Warren\u00a0Buffet stresses the need for courage, since the best opportunities arise from the midst of crises. If he emphasises the importance of having the money available upfront, it\u2019s because you must be able to bear any losses without ending up broke. So bear this principle in mind, but talk to your banker before applying it.<\/p>\n<h2 id=\"h2_9\" >10. \u201cDo not put all your eggs in one basket\u201d<\/h2>\n<p>All investors know this, and it\u2019s probably Warren\u00a0Buffet\u2019s most important advice. No investment is 100% safe. Many bankers will tell you that whether you invest a lot or a little, you should spread your investments across different assets, sectors and regions. This diversification strategy is based on common sense and, in combination with a long-term approach, has the advantage of reducing risk and multiplying your potential sources of return.<\/p>\n<p>Finance and investment may appear complex in more than one respect. Rash, fearful or badly-informed action can result in mistakes that may have dramatic consequences. The advice of well-known experts in the field is always useful when looking to grow your capital, but the day-to-day support of your banker to adapt your approach to the specifics of your situation is indispensable.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The recommendations of experts are always helpful when it comes to growing your investments and improving the state of your finances. And as Warren\u00a0Buffet is the undisputed reference on such matters, myLIFE has pulled together his most enlightening quotations. Help yourself, it\u2019s free! Warren\u00a0Buffet is a US businessman, investor and billionaire, who is also well-known &hellip; <\/p>\n<p class=\"link-more\"><a href=\"https:\/\/my-life.lu\/en\/finances-what-we-can-learn-from-warren-buffet-30111\/\" class=\"more-link\">Continue reading<span class=\"screen-reader-text\"> &#8220;Finances: what we can learn from Warren Buffet&#8221;<\/span><\/a><\/p>\n","protected":false},"author":4,"featured_media":19064,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":"","beyondwords_generate_audio":"","beyondwords_integration_method":"","beyondwords_project_id":"","beyondwords_content_id":"","beyondwords_preview_token":"","beyondwords_player_content":"","beyondwords_player_style":"","beyondwords_language_code":"","beyondwords_language_id":"","beyondwords_title_voice_id":"","beyondwords_body_voice_id":"","beyondwords_summary_voice_id":"","beyondwords_error_message":"","beyondwords_disabled":"","beyondwords_delete_content":"","beyondwords_podcast_id":"","beyondwords_hash":"","publish_post_to_speechkit":"","speechkit_hash":"","speechkit_generate_audio":"","speechkit_project_id":"","speechkit_podcast_id":"","speechkit_error_message":"","speechkit_disabled":"","speechkit_access_key":"","speechkit_error":"","speechkit_info":"","speechkit_response":"","speechkit_retries":"","speechkit_status":"","speechkit_updated_at":"","_speechkit_link":"","_speechkit_text":""},"categories":[188,15],"tags":[400],"class_list":["post-19067","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investment-en","category-myinvest-en","tag-investment","my_invest"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v27.3 (Yoast SEO v27.3) - 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