Recently I discovered that my hairdresser of 20 years is married to the niece of Warren Buffett who, without a doubt, is one of the greatest investors of all time. Through good and bad, he has created and maintained his wealth through the stock market and wise business choices. As I looked over his principles for success, I soon realized that they could very easily be applied in building our own life and/or business.
Adhere to a proven strategy.
Buffett’s success has often been attributed to his extraordinary patience and discipline, never deviating from his proven investment strategy.
Most people spend more time planning where they’re going to eat or go during the holidays than they do planning where they wish to be in the next 5 years, personally or professionally. If you have not outlined a solid strategy to keep you focused, how can you hope to expand your joy and financial independence? It’s far too easy to get distracted by all the shiny objects in the market disguised as “opportunities”. It’s sad to say that many of those so called “Get Rich Quick” methods don’t work out as expected. So, design your own plan and stick with it!
At times, it’s best to do nothing.
“The trick is, when there is nothing to do – do nothing.”, states Warren Buffett. This reminds me of another powerful quote from Franklin D. Roosevelt, “When you come to the end of your rope, tie a knot and hang on.”
There are stages in our life or business growth when the best thing to do while faced with a challenge is to take a deep breath, relax, let the wave pass and then slowly swim back to shore. Taking time out to reflect could mean a world of difference if you are in the middle of a negotiation for your business or a new life path.
Specialize – Don’t diversify.
Buffett’s primary wealth comes from investing the bulk of his funds in a few companies, despite the fact that most stock brokers suggest diversifying. This sounds much like playing to lose, rather than playing to win. In fact, successful entreprenuers specialize. How many areas of your life are you trying to get off the ground? Try to choose just one at a time to focus on and you’ll begin to see results.
Invest for value.
Buffett is a value investor who says, “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.” That’s the same philosophy in Real Estate, “It’s best to buy the worst house in a great neighborhood than buying the best house in the worst neighborhood.” This runs true in our own lives. It’s best to focus on understanding your own personal strengths rather than your weaknesses. If you realize your true value, others will be more willing to invest in you or your business. Think about it. Would you rather invest in something that is based on a foundation of weakness or strength?
Invest for the long haul.
Buffett admits he can’t predict which way the markets will move in the short-term and he is quite certain no one else can either. So instead, he takes a long-term view of the market saying, “If you don’t feel comfortable owning a stock for 10 years, you shouldn’t own it for 10 minutes.”
The same rings true for those who embark in a relationship, despite seeing the red flags, or even in your business. Are you comitting to work with a client that you can’t stand simply hoping it will all work out in the long run? Sometimes we need to know that it’s ok to cut our losses and move forward before we are too deep in a situation.
Don’t invest in anything you don’t understand.
During the boom years, investors’ hunger for returns took them into exotic terrain, whether they realized it or not. Promoters often promised large profits using opaque schemes and the same is starting to happen again as the new property cycle rolls on. Warren Buffett never invests in anything he doesn’t understand – nor should you. Don’t waste time making new friendships or starting a business if you don’t understand or appreciate the value they may add to your life. Eventually you may take them forgranted or just give up on them altogether. It’s easier to stay focused on something when we understand the benefits it will have in our life or business.
Manage your risks.
One common error is not having sufficient financial buffers to see you through from one property cycle to the next. Your inner spiritual and mental strength needs to be in order if you are about to embark on a new personal or professional life. Can you handle the worst case scenarios? Do you have a back up plan? If yes, then move forward.
A final lesson from the master is that bad times will come and go with surprising frequency over our lifetime, but if we have a plan and stay focused on sound strategies, we can move forward and build our dream lifestyle!