Tag Archives: get rich

10 Ways to Get Rich from Warren Buffett

Warren Buffett's 10 Ways To Get RichWhat does one of the richest men in the world say you should do if you too want to be rich? Obviously he’s a very good person to listen to on the topic, and here’s his advice.

With an estimated fortune of $62 billion, Warren Buffett is the richest man in the entire world. In 1962, when he began buying stock in Berkshire Hathaway, a share cost $7.50. Today, Warren Buffett, 78, is Berkshire’s chairman and CEO, and one share of the company’s class A stock worth close to $119,000. He credits his astonishing success to several key strategies, which he has shared with writer Alice Schroeder. She spend hundreds of hours interviewing the Sage of Omaha for the new authorized biography The Snowball. Here are some of Warren Buffett’s money-making secrets — and how they could work for you.

1. Reinvest Your Profits: When you first make money in the stock market, you may be tempted to spend it. Don’t. Instead, reinvest the profits. Warren Buffett learned this early on. In high school, he and a pal bought a pinball machine to put in a barbershop. With the money they earned, they bought more machines until they had eight in different shops. When the friends sold the venture, Warren Buffett used the proceeds to buy stocks and to start another small business. By age 26, he’d amassed $174,000 — or $1.4 million in today’s money. Even a small sum can turn into great wealth.

2. Be Willing To Be Different: Don’t base your decisions upon what everyone is saying or doing. When Warren Buffett began managing money in 1956 with $100,000 cobbled together from a handful of investors, he was dubbed an oddball. He worked in Omaha, not Wall Street, and he refused to tell his parents where he was putting their money. People predicted that he’d fail, but when he closed his partnership 14 years later, it was worth more than $100 million. Instead of following the crowd, he looked for undervalued investments and ended up vastly beating the market average every single year. To Warren Buffett, the average is just that — what everybody else is doing. to be above average, you need to measure yourself by what he calls the Inner Scorecard, judging yourself by your own standards and not the world’s.

3. Never Suck Your Thumb: Gather in advance any information you need to make a decision, and ask a friend or relative to make sure that you stick to a deadline. Warren Buffett prides himself on swiftly making up his mind and acting on it. He calls any unnecessary sitting and thinking “thumb sucking.” When people offer him a business or an investment, he says, “I won’t talk unless they bring me a price.” He gives them an answer on the spot.

4. Spell Out The Deal Before You Start: Your bargaining leverage is always greatest before you begin a job — that’s when you have something to offer that the other party wants. Warren Buffett learned this lesson the hard way as a kid, when his grandfather Ernest hired him and a friend to dig out the family grocery store after a blizzard. The boys spent five hours shoveling until they could barely straighten their frozen hands. Afterward, his grandfather gave the pair less than 90 cents to split. Warren Buffett was horrified that he performed such backbreaking work only to earn pennies an hour. Always nail down the specifics of a deal in advance — even with your friends and relatives.

5. Watch Small Expenses: Warren Buffett invests in businesses run by managers who obsess over the tiniest costs. He one acquired a company whose owner counted the sheets in rolls of 500-sheet toilet paper to see if he was being cheated (he was). He also admired a friend who painted only on the side of his office building that faced the road. Exercising vigilance over every expense can make your profits — and your paycheck — go much further.

Read the last 5 ways on WarrenBuffett.com.

365 Ways to Get Rich (Part 4)

We’re in the process of sharing a series of tips from Forbes on how to get rich. You can read part 1 here, part 2 here and part 3 here.

If you’re one of the many people who want to get rich but aren’t sure how to go about it, these ideas will help.

Here are the next tips in the series…

#62
Defy conventional wisdom and increase your stock allocation after retirement.

#63
To make money in small-cap stocks, look for novel business methods and niches, not the next blockbuster drug.

#64
Don’t abdicate investment decisions to your spouse.

#65
Be suspicious—and investigate further—when a corporation changes its auditors.

#66
Carry a $2 million or bigger umbrella insurance policy to protect your wealth from liability suits.

#67
Warren Buffett: “Be fearful when others are greedy,  and be greedy when others are fearful.”

#68
Invest to meet goals, not to beat indexes.

#69
Clarify your own objectives by writing an Investment Policy Statement.

#70
When you get restricted stock in a startup, make an 83(b) election; if the company takes off, you’ll save big on taxes.

#71
Consider your marriage tax penalty (or bonus) before setting a wedding date.

#72
Aim to have five times your salary in your 401(k) and IRAs by age 55 and eight times before you retire.

#73
Dan Ariely: “If you can’t save money, be really nice to your kids.”

#74
Put peer-to-peer loans in your portfolio using sites like LendingClub.com for monthly cash flow and yields of from 7% to 9%.

#75
Peter Lynch: “Go for a business that any idiot can run—because sooner or later, any idiot is probably going to run it.”

#76
Never take on a mortgage just for the tax deduction.

#77
Keep no more than $250,000 in any one bank.

#78
Buy an index fund weighted to fundamentals.

#79
Remain anonymous after winning the Powerball jackpot.

#80
Work for a charity for ten years and get your federal student debt forgiven.

Read the rest of the tips on Forbes.

365 Ways to Get Rich (Part 2)

We shared the first 20 tips from Forbes on how to get rich in a previous post.

This is something that many people want but few know how to do.

Now here are the next 20…

#21
When the bear charges, stand your ground.

#22
For protection from inflation and currency devaluation, buy the “gold you can eat”—farmland.

#23
Know your risk tolerance. Pick an asset allocation that lets you sleep at night, so you won’t panic and sell stocks at the bottom.

#24
Don’t keep too much in cash equivalents—over time, this “safe” investment barely keeps up with inflation.

#25
After setting an asset allocation, rebalance yearly;  it forces you to take profits when stocks have surged and to buy more shares when they’re cheap.

#26
Benjamin Graham: “Adopt simple rules and stick to them.”

#27
Buy Bitcoin as a speculation or political statement, not a hedge.

The Forbes E-book On Bitcoin Secret Money: Living on Bitcoin in the Real World, by Forbes staff writer Kashmir Hill, can be bought in Bitcoin or legal tender.

#28
Be a tax-smart investor. Hold taxable bonds in a 401(k) or IRA. Put individual stocks in taxable accounts so you can sell losers to harvest tax losses.

#29
Pay attention to the IRS’ wash sale rule when harvesting capital losses.

#30
Don’t invest in a hedge fund unless its audited results are reported in compliance with Global Investment Performance Standards.

#31
Build an emergency fund outside your 401(k).

#32
For the biggest tax break when donating collectibles to charity, make sure they’ll be displayed and not sold.

#33
Put alternative investments like real estate (but never collectibles) in your IRA.

#34
Burton Malkiel: “All index funds are not created equal. Some have unconscionably high expenses.”

#35
Keep an eye on—but don’t obsess over—mutual fund fees and expenses.

#36
Even committed indexers should use actively managed funds to buy municipal and high-yield bonds and value stocks.

#37
Yield is nice, but total return is the metric that matters.

#38
Gold is overrated as an inflation hedge—historically, its price moves are unrelated to inflation.

#39
For inflation protection, buy floating-rate corporate bonds.

#40
Don’t let the mood swings of Mr. Market coax you into speculating.

Read the rest of the tips on Forbes.

365 Ways to Get Rich (Part 1)

Of course nearly everybody wants to get rich, but most people don’t know how to go about it.

Here are some tips from Forbes on multiple ways to get on the right path… and we’ll share more of them in future posts.

From the Forbes 2014 Investment Guide, wealth building tips to last  you through the year. (For more detailed advice, click on the link in each tip.)

#1
Sir John Templeton: “Invest at the point of maximum pessimism.”

#2
Don’t mistake a low P/E ratio for a value stock.

#3
Benjamin Graham: “Patience is the fund investor’s single most powerful ally.”

#4
Let your attorneys ride shotgun, but not in the driver’s seat.

#5
Remember Enron; reduce your employer’s company stock in your 401(k).

#6
Warren Buffett: “Rule No. 1 is never lose money. Rule No. 2 is never forget Rule No. 1!”

#7
Fund a Roth IRA if you’re eligible; your money grows tax free for retirement, and in an emergency you can take your contribution back without penalty.

#8
Barry Sternlicht: Pay attention to the big themes, because they are what will help you earn ten times your money.

#9
Back a friend or relative’s startup with a convertible loan, so you share in the upside.

#10
Use commodities as a hedge against inflation.

#11
Raise the deductibles on your auto and home insurance.

#12
Form family limited partnerships to transfer assets at a tax discount.

#13
Beat death taxes in 20 states by making big gifts while you’re alive.

#14
For simple federal tax-free wealth transfer, make $14,000 annual gifts to children and grandchildren. It won’t cut into your $5.25 million lifetime exemption from gift and estate taxes.

#15
Get tax advice before settling a lawsuit.

#16
Read Reminiscences of a Stock Operator by Edwin LeFèvre.

#17
To keep peace with both relatives and the IRS, document all family loans.

#18
Peter Lynch: “Never invest in any idea you can’t illustrate  with a crayon.”

#19
View collecting as a hobby first and investment second; psychic returns can make up for a lower average return than in stocks.

#20
Add a personal items floater to your homeowner’s insurance to cover collectibles.

Read the rest of the tips on Forbes.