Sometimes last year, I read a post about the frugality of the billionaire magnate, Warren Buffet who taught himself how to invest at the early age of 11.
Since then I’ve been studying more about this man whom I have come to respect so much. It’s not just about the wealth, it’s about how he has been able to maintain a modest lifestyle despite being one of the richest men in the world.
When most people talk about wealth building, all they talk about is finding the right time. However, Buffet has taught us that the right time is now. Yes, it is never too early or too late to start.
Here are 4 crucial things that Buffet wants you to know about wealth building.
1. Start small: Many people wait until they are a certain age, start working a certain business, start earning a certain income etc. but the problem is if you do not know how to invest when you have little to nothing, investment won’t come naturally when you have everything at your disposal. The key to investing and wealth building is to commit to starting small and building your way up.
2. Give it time: Many believe that wealth building is an overnight venture. This is not true. Wealth building is not designed for the impatient or for people who believe in instant gratification. Don’t expect that you can cash out in one, two, five or even ten years. Think about the long-term. The longer you allow your money to mature, the better it is.
When it comes to wealth building, patience is key.
Investments need time to mature. Don’t expect to be wealthy after investing for a few months or a few years.
3. Commit to learning: If you want to build your wealth, you must commit to learning about wealth building. For Mr. Buffet, learning is not just about what you are taught in school, it’s about what you can learn in your area of interest. You do not need to be an investment expert to learn about investing. You can be anything and still create time to learn about wealth building so you can secure your future. Don’t use statements like “you can’t teach an old dog a new trick” as an excuse not to learn. Instead, challenge yourself and keep learning. An hour a day invested in learning about “investments” will pay you in the long run.
4. Don’t change your lifestyle: Many people change their lifestyle once they see their investment is yielding returns. Mr. Buffet thinks this type of mentality is not wise. When you earn dividends, don’t change your lifestyle to match what you cannot afford. Even if you can afford it, ask yourself “is it expedient?” If it’s not expedient, then you do not need to do it. Your dividends should be reinvested repeatedly so you can build your wealth over time. Mr. Buffet is a billionaire who has lived in the same house since 1958 and he is reported to have said his house was the third-best investment he has ever made. There’s a lesson embedded in his lifestyle and approach.
After noting these four points noted, it is also worthy of note that prior to investing in any product or industry, you must be sure of the terms and conditions for investing. If an investment offers you a return or interest rate that sounds too good to be true, it’s probably what it is, too good to be true.
Thank you for reading. What other tips do you think people should know about wealth-building? Join the conversation in the comment box and remember to share this post with a friend.