7 Secrets to Investing Like Warren BuffettPaperback (2024)

FAQs

What are the Warren Buffett's first 3 rules of investing money? ›

So, why does Buffett only recommend index funds? Because it's the best possible choice, "on an expectancy basis," as he put it. In other words, buying an index fund has a higher expected return than buying any single individual stock or actively managed mutual fund.

By saying no to many good opportunities, Buffett has been able to say yes to the great ones, investing with a deep understanding and long-term perspective. His approach serves as a timeless lesson for investors, proving that in the pursuit of investment success, focus isn't just important, it's essential.

Warren Buffett once said, “The first rule of an investment is don't lose [money]. And the second rule of an investment is don't forget the first rule. And that's all the rules there are.”

A 70/30 portfolio is an investment portfolio where 70% of investment capital is allocated to stocks and 30% to fixed-income securities, primarily bonds.

Invest in Small Companies

Buffett recommends investing in small companies. Large investors — like Buffett — and funds tend to place focus on larger companies, which means small business stocks will have less competition, allowing someone with $10,000 to find some hidden gems.

The reasons why Buffett initially bought Mitsui are still applicable. Despite its tremendous gains in recent years, the stock remains attractively valued with a trailing 12-month price-to-earnings ratio of below 10.4. Mitsui offers a solid dividend which yields nearly 2.4%.

I read annual reports, and I read a lot of other things, too. So, I've always enjoyed reading. I love reading biographies, for example.” – Warren Buffett. So Buffett says he reads around 5-6 hours daily, including newspapers, magazines, 10Ks, annual reports, and biographies.

What is Warren Buffet IQ? ›

Warren Buffett reportedly has an IQ of over 150 (anything past 140 is considered a genius), and while it has, no doubt, helped him become one of the world's richest men, the lesson here is to value emotional intelligence (EQ) just as highly.

Indeed, the Oracle of Omaha has said that he spends “five or six hours a day” reading books and newspapers. And while it may be difficult to set aside nearly a full work day's worth of hours to read, it recently got a little bit easier to consume information like Warren Buffett.

“I always tell students, find a job that you would like to have if you didn't need a job. Sometimes you can find that very early, and sometimes you go through various experiences,” he said. “But don't forget what you're actually trying to do.”

The 10-5-3 rule is a general guideline for investing, suggesting an allocation of 10% of your portfolio in cash, 5% in bonds, and 3% in commodities.