Warren Buffett is undoubtedly the most successful investor in the world. He has made his wealth of about $80 billion from investments in the financial sector. Buffett is now 87 and probably what he has been doing more than anything else is imparting knowledge to the new generation of investors on some of the best methods of investing. In his experience which spans over 70 years, he has learned a lot and now it time for him to share the best tips for investing. In his annual letter to shareholders of Berkshire Hathaway Inc., he has a section where he advises investors generally on how to make the right investment decisions.
According to Warren Buffett, aspiring investors should stop treating stocks as a business and not as tickers. Many investors make decisions to buy or sell a stock based on chart patterns and such other weak methods. While dealing with the stock markets, one should treat their investments as good businesses where they expect to reap big. Buffett believes that the businesses he has invested in will do well and consequently his firm will also do well from the investments.
Another crucial investing tip that Warren Buffett offers is that one should never invest borrowed money. He believes there is a huge risk in using borrowed money to buy a stock or any other margin based investment. Why does he think is not wise? A stock may go down causing losses which will make the investor panic since he or she is using borrowed money.
Warren Buffett uses his own company, Berkshire Hathaway to describe why he does not believe in investing with borrowed money. His own company has suffered from a severe drop in stock prices. Sometimes it occurs within a very short time, and there is no measure to how far it can fall. So, even if using small amounts of money, the loss can finally be too huge to handle.