A Simple Way to Invest Like Warren Buffett

So many people feel that investing is imperative when it comes to creating a comfortable retirement, but they are unfortunately reluctant to take that first investing step. Many people are often hindered by some of the investment myths out there today, such as “investing is a gamble” and “I don’t have enough knowledge to pit against the top brains in the industry.”

Please understand that investing does not need to be so difficult. The living legend of investors – Warren Buffett – has made billions of dollars from purchasing companies that he understands at low prices. If the company is out of his overall circle of competence, he does not pay attention to it. He will not look at companies that he doesn’t understand. He will stay away from businesses that are also very unpredictable and change rapidly.

Many people chastise Warren Buffett during the 1990s – approaching the 2000s – saying he lost this touch because he refused to purchase any of the technology stocks. As we all know, Warren Buffett got the last laugh after the tech bubble burst and he was able to pick up many bargain-basement priced stocks at this time.

Looking for Investment Ideas

If you are an average investor, you probably believe that you understand very little about many of the companies and you probably also feel that your knowledge of finances is limited. But here’s the reality of your situation…

You deal with many products and services each and every day. You may come across them at work or even in your personal life. So think about the products that you use regularly, and consider them as potential investments.

Maybe you frequent particular shopping malls. This is one area in which you could easily invest. How about your favorite snacks? What about your favorite restaurants or fast food locations? These are all potential investment ideas that you can certainly explore.

Let’s take a look at Warren Buffett’s portfolio to help you better understand…

Buffett and Berkshire Hathaway have owned shares of Coca-Cola for many decades now. Why? Because Warren Buffett loves to drink it, he understands it and recognized that the rest of the world would be hooked on the stuff as well. As you can see, it’s not always difficult to choose investments. Just choose companies that you know, like and trust in you should do fine.

Price Is Very Important When Choosing Investments

Remember, just because you know, like and trust a company, doesn’t mean that it’s a good buy. The price may be inflated at the time, and you’ll need to patiently wait for its shares to be offered at a discounted price. This is how Warren Buffett invests, and it’s the reason why he and Berkshire Hathaway have made billions upon billions of dollars throughout the years.

Use company financial statements to estimate their intrinsic value. Use company filings to judge their true worth. There are many undervalued stocks in the marketplace. You need to do your research and find the ones that make the most sense to you.

To wrap things up, you need to invest in predictable, stable businesses that are very simple to understand. You’ll know exactly how they make money and recognize that it’s wise to stay away from investments that appear risky. You’ll sleep much better at night if you invest in safe companies that you understand.

Leave a Reply

Your email address will not be published. Required fields are marked *