Do you want an investment strategy that Hakim Omaha agrees with? There’s no need to spend hours scrutinizing the financial statements.
As a matter of fact, Warren Buffett has a very simple strategy, which he believes is the best way for the vast majority of individuals to invest.
Here’s how the president of Berkshire Hathaway is seeing how to invest, even if you’re not watching the stock market.
1- Buying in index funds
Buffett is known to be the most famous stock picker around the world, but he doesn’t think most people should invest in individual stocks.
For many years, Buffett was considered “index funds.”S&P 500It is the best way for most Americans to accumulate wealth, as it automatically makes you an investor in all 500 companies whose shares fall into the broader index, including Berkshire Hathaway, Bank of America and Apple.
Buffett’s instructions state that 90% of personal wealth must be invested in index fundsWhile the remaining 10% is placed in short-term US Treasury bonds.
2- Keep fees low
Buffett repeatedly notes that most fund managers who try to outperform on a broad index likeS&P 500“In the long run they will be underperforming.
– In this context, sage Omaha wrote: “When trillions of dollars are being managed before Wall Street investors by charging high fees, it is usually the managers who make the big profits, not the customers. “
3- Paying credit card debts before investing
– During a hypothetical shareholders meeting of his company this year, in response to a question about the credit card industry, Buffett highlighted the high cost of carry-over on credit cards.
– The founder of Berkshire Hathaway cited in this situation the story of a friend who asked for advice on what to do with her money, saying that he advised her to provide 18% interest payments by paying off credit card debt, because what would be saved would be much greater than what she could gain from any investment .
4- Apply the average cost in dollars
– Attempting to time the market (trying to predict future market price movements to buy at a low price and sell at a high price) is not favorable to Buffett, as he said last February during statements that the market could not be predicted through the newspaper’s daily reading.
– But “Buffett” supports the approach of trying to reach the average cost in dollars, whereby the investment is made at a regular pace during fixed periods of time, regardless of what happens in the stock market.
– So; When founder Berkshire Hathaway recommended funds that track a broad index likeS&P 500This was accompanied by a warning: ‘Don’t put your money in all at once, do it over a period of time.’
5- Long-term investment
Whether you follow Buffett’s advice and stick to passively managed index funds or choose your own stocks, he suggests that you ignore the short-term results and focus on an average period of four to five years.
As long as you are an investor in the stock market, Buffett believes that good results can be counted on over time.
In his address to Berkshire Hathaway shareholders in 2016, Buffett said: “It is almost certain that US companies – and thus a basket of stocks – will be of much greater value in the coming years.”
Source: Motley Full
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