Long-Term Investing Tips
Warren Buffett is a money-making maven. Learn some Long-Term Investing Tips with him. In February, Buffett released an excerpt on Fortune that gives investors four investing tips for the long-term. He cited two imperative investments, one made in the 1970s and the other one in the 1980s. Buffett, the chairman and CEO of Berkshire Hathaway, gave the investors many pieces of useful advice for making long-term investing decisions. Let’s take a look at what he had to say.
Long-Term Investing Tip 1. Own low-cost S&P 500 index funds.
This is one tip that Mr. Buffett stresses over and over. It’s a theme he’s honed in on throughout his investing career: Don’t try to pick winning stocks. There’s a better and and more effective way to do it. You need to “own a cross section of businesses that in aggregate are bound to do well.” A low-cost S&P 500 index fund helps any investor do this well.
“In the 20th century, the Dow Jones industrial average advanced from 66 to 11,497, paying a rising stream of dividends to boot. The 21st century will witness further gains, almost certain to be substantial.”
The Oracle of Omaha writes that when he passes away, he has left instructions for his trustee to invest the cash designated for his wife in two ways — 10% in short-term government bonds and 90% in a very low-cost S&P index fund. He definitely knows what he’s doing. He suggests Vanguard’s index fund.
“I believe the trust’s long-term results from this policy will be superior to those attained by most investors who employ high-fee managers.”
Long-Term Investing Tip 2. — Focus on productivity of assets.
Ignore your or anyone else’s predictions about long or short-term price changes. Focus instead on productivity of assets. Buffett spoke of his two investments. Over the past several decades, both of them have paid off considerably. He said he completely “ignored what the economy, interest rates, or the stock market might do in the immediate years following.” Instead, with these investments– a farm in Nebraska and NYU-area real estate — he looked at the future productivity of these assets. He was thinking ahead on his own accord.
Over decades, he asked himself would corn prices ultimately keep rising? Could the actual building in which he was investing command higher price per square foot than they were at the time? In both cases he answered yes.
“If you instead focus on the prospective price change of a contemplated purchase, you are speculating.”
Long-Term Investing Tip 3. — Ignore the macro environment and political environment.
Buffett explains that when he and his partner Charlie Munger buy stocks, they think of them as “small portion of businesses” and try to see the earnings power of these businesses over the next five years or more. “In the 54 years we have worked together, we have never forgone an attractive purchase because of the macro or political environment.”
The Oracle of Omaha said he didn’t fret about real-estate prices or stock prices during the Great Recession. “Could anyone really believe the earth was going to swallow up the incredible productive assets and unlimited human ingenuity existing in America?”
Long-Term Investing Tip 4 — Make as few investments as possible.
Investors are urged to be active and to buy low, sell high. Slow it down, says Mr. Buffett. Frequent buying and selling only cuts into long-term returns.
“Ignore the chatter, keep your costs minimal, and invest in stocks as you would a farm.”
Mr. Buffett knows a lot about investing. That’s an obvious assessment to make. Now it’s up to you to make your own investing decisions. Lantzman Lending is number one in Direct Private Money Lenders, providing competitive rates and terms for loans throughout California, Nevada and Arizona. Call us at (858)720-0229 or visit our website: https://www.lantzmanlending.com/