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#OtvTIPS: Warren Buffett ’ s Advice : Forget Get – Rich – Quick. Here ’ s How to Get Rich Slowly

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Warren Buffett has lots of advice for investors, and it comes
down to this: Get over yourself. Stop thinking that there’s a
magical secret formula for making tons of money overnight,
and that you can discover it because you’re smarter than
any other investor out there. In fact, his suggestions seem
to say, when it comes to getting rich, slow and steady wins
the race.
The personal finance site GO Banking Rates has reviewed
Buffett’s most recent advice and compiled it into a list of
tips. You can see the full list here . Meanwhile, here are
three items that give some insight into the Oracle of
Omaha’s thought process.
1. Put your long-term investments in an index fund tied to
the S&P 500.
At least that’s what Buffett says he himself intends to
recommend for the money he leaves to his wife, in what GO
Banking Rates describes as “a product that’s as old, stodgy,
and lucrative as himself.” Buffett’s plan: put 10 percent of
the cash in short-term government bonds and 90 percent in
a very low-cost S&P 500 index fund. “I believe the trust’s
long-term results from this policy will be superior to those
attained by most investors–whether pension funds,
institutions, or individuals–who employ high-fee managers,”
he adds.
He’s most likely right about that. Research seems to
support the notion that index funds outperform managed
funds (including mutual funds) the vast majority of the time.
The logic is simple: Since index funds are “passive,” just a
matter of buying all the stocks in a given index such as the
S&P 500, there’s much less cost to cover a sophisticated
financial planner, and less expense for buying and selling
investments in an attempt to gain more return.
But make careful note of the phrase “long-term.” The stock
market can crash and then can take many years to catch up
to itself again. To reap the return, you must have both the
time and the self-discipline to leave your money in the index
fund and wait out the down cycle. It’s not right for
everyone.
2. Learn to save.
Buffett shared this bit of insight during a television special
last year. “I think the biggest mistake is not learning the
habits of saving properly early. Because saving is a habit,”
he said. Another big mistake, he added, is trying to get rich
quick. “It’s pretty easy to get well-to-do slowly. But it’s not
easy to get rich quick.”
3. When a stock price falls, buy, don’t sell.
Buffett followed his own advice last year when he lost $2
billion in a matter of days after disappointing earnings
reports drove down the prices of some of his biggest
investments. But as he told CNBC, investors who jump ship
when a stock price goes down deprive themselves of the
chance to recover lost funds when the price goes back up.
Buffett has said he likes bear markets, and the more prices
drop, the more he likes to buy. But in general, his advice is
to buy dependable long-term stocks in companies whose
industry and business model you thoroughly understand. “If
you told me that the market was going to go down 500
points next week, I would have bought those same
businesses and stocks yesterday,” he explained. “I don’t
know how to tell what the market’s going to do. I do know
how to pick out reasonable businesses to own over a long
period of time.”

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