If anyone knows how to make a fortune, it’s the Oracle of Omaha – Warren Buffet. Simply take his advice, work towards it and get rich. Whether you’re looking for investment advice or getting rich, Warren Buffett could be the perfect role model. Known for his Berkshire Hathaway holding company, Buffett has a net worth of over $80 billion according to Forbes. But the Oracle of Omaha was not born with bread under his arm. Although his origins are humble, he made a net worth of $1 million at age 30, so it’s no wonder many people think Buffett knows a thing or two about how to make money. If you’re looking for tips on how to improve your investments or earn a million dollars, Buffett has a lot to teach you.
Here’s Buffett’s advice so you can win your first million dollars.
Develop an entrepreneurial mindset from the start
As a young man, Buffett had a gift for thinking differently and finding creative ways to make money. He had a job delivering newspapers and a pinball machine.
So, learn from Buffett: If you want to become a millionaire, don’t put off your business until you’re older. Find ways to earn more money – and once you earn it, make a savings plan and start investing. People who start investing early save more and reap the benefits of compound interest. People who start investing early also tend to have greater financial awareness in other areas. They tend to realize more quickly where they are wasting their money and find ways to apply the wisdom to invest in other parts of their lives.
Reinvest your profits
If you make money on an investment, don’t take it out – follow Warren Buffett’s investment strategy and reinvest your profits. As a teenager, Buffett partnered with a friend and opened a pinball machine business. They started with a machine and a $25 investment. Instead of spending all their profits on teenage stuff, they used the money to buy additional machines until they had eight in different places. When the two partners split up and sold the pinball business, Buffett used some of his profits to open another one. Being optimistic about business is great, but not always successful. Each month, save 10 to 25% of your earnings and reinvest them in different businesses. Thus, even if one of your investments collapses, “the rest will be safe in other industries”.
Avoid unnecessary debt
You may be familiar with the saying, “You have to spend money to make money. Starting a business requires a certain amount of capital, and some people depend on loans to start or expand a business. Warren Buffett’s advice on this matter is this: avoid unnecessary credit card and loan debt. In a 1991 speech at Notre Dame, Buffett said he had seen many people fail “because of liquor and leverage”. He even named Donald Trump, citing some of his investment failures in his example. “He just thought about how much money he could borrow, and he didn’t think enough about how much money he could pay back,” Buffett said. “If you’re smart, you’re going to make a lot of money without taking out a loan,” Buffett continued. “I’ve never borrowed a significant amount of money in my entire life.”
If you have no choice but to ask for money, keep the interest rate low.
Although Buffett prefers to buy companies without borrowing, he uses leverage when he can increase the return on capital. In a letter to his 2010 shareholders, Buffett mentioned a benefit from the loans, as well as a danger. “When leverage works, it magnifies your profits. Your spouse will think you’re smart and your neighbors will envy you,” Buffett said. “But leverage is addictive. Once you have benefited from its wonders, very few people return to the more conservative practices. If you’re trying to make millions of dollars and have to borrow money, just borrow what you need at a low, fixed interest rate. Then, pay your debt as soon as you can.
Wondering how to make millions like Buffett?
Don’t forget to imitate his lifestyle and follow investment strategies. Normally, the more people earn, the more they spend. They improve their lifestyle with bigger houses, luxury cars and better holidays. But Buffett takes a different approach. Despite his enormous fortune, Buffett lives a simple and modest life. He currently resides in Omaha, Nebraska, in the house he bought in 1958 for $31,500 – $250,000 inflation-adjusted – and in 2016 he earned only a base salary of $100,000 as president and CEO of Berkshire Hathaway. The more you spend, the longer it takes you to win your first million dollars. If you live simply and minimize your expenses, you will have more opportunities to save, invest and earn thanks to compound interest. Follow Buffett’s lifestyle and you’ll be able to get rich much faster than those who spend a lot.
Never stop learning
You don’t need a college degree to make millions, you need to feed your mind. Doing so can help you understand how different investments and businesses work. Buffett may be an investment genius, but that doesn’t stop him from reading and learning. Buffett says he reads at least four hours a day. If you want to be a millionaire, you have to be the best at something, and the only way to do that is to keep feeding your mind. A normal person can’t spend all day reading. However, what you can do is take advantage of every learning opportunity, such as attending investment conferences and seminars or taking online courses.
Surround yourself with people who will motivate you
Buffett encourages you to surround yourself with people better than you. Choose people whose behavior is better than yours and you’ll end up like them. Remember, the people in your life can motivate you to do good or evil. To do it right, you have to imitate successful people. Maybe that’s why Buffett surrounds himself with business people like Bill Gates, who have been friends for 25 years now.
The goal is simple: To make more money, choose your friends with your carefully. You don’t have to avoid your ruined friends. But you’re not going to become a millionaire if you spend time people who make excuses or tell you you can’t do anything.
Don’t ignore the opportunities
Winning your first million could be risky and going out of your comfort zone, which requires confidence. Fear or doubt on this journey can be a stumbling block, especially if you question yourself and reject potentially lucrative opportunities. Opportunities don’t come along every day, and Buffett’s best investments are proof that he knows how to take advantage of opportunities.
In a speech to the students of the University of Georgia, he gave this advice:
You have to take advantage of the great opportunities that life gives you. “We don’t do a lot of things, but when we get the chance to do something that’s right and big, we have to do it,” Buffett said. “And even doing it on a small scale is as big a mistake as not doing it at all. You have to catch them when they come, because you’re not going to have 500 great opportunities in your lifetime.
Between his investment approach, his business philosophies and his simplistic lifestyle, the Oracle of Omaha is a role model. After all, Warren Buffett’s investments have added billions to his net worth. Not only does he know how to make money, he also knows how to save. You don’t have to imitate everything he does, but if you start to follow some of its strategies, you may end up discovering the path to financial freedom.