After Elon Musk and Bill Gates, he is Warren Buffet. In fact, to be fair, he is in fourth place, as he is ahead of Bernard Arnauld, in the world rankings.
Who are they? The richest men in the world. All right, we can never become like them but it is certainly possible to treasure some of their most effective teachings for making money. Here is what the Warren Buffett method is for doubling your savings.
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What is Warren Buffett’s method for doubling savings
Let’s start with an assumption that is essential to understanding the advice to follow. One does not become so rich by “simply” working.
Great entrepreneurs-and all the more so those who become the wealthiest men on the planet – run businesses and, above all, invest their savings in a way that allows them to grow without having to further add hours of work to achieve the goal.
There are those who invest in the stock market, those who buy the shares of the strongest companies. Here, Warren Buffett’s method falls into this sphere but with a special feature.
This method is based on the value philosophy. And it consists of investing in companies that are valuable but undervalued by the market. The approach is long-term, ignoring the so-called background noise.
So-called value investing is a real, value-oriented investment technique. Following a fundamental analysis, you identify those stocks that are actually worth more, than they are traded on the stock market.
In order to multiply one’s money, one then invests in high-quality companies, a small and well-selected number of which to buy shares of some significance.
How did Warren Buffett get rich
Buffett is the CEO and largest shareholder of Berkshire Hathaway, a holding company that owns stakes in some of the world’s largest companies.
Buffett is considered a financial icon. And because of his value investing approach, he has focused his skills on finding real investment bargains not to be missed.
In simpler words, the entrepreneur and economist has always “seen through” the companies in which he has invested. Thus intercepting their value that, however, appeared undervalued by the market at the time.
In practice, his nose for business led him to identify the growth potential of a business activity, and then bet on it, in the long run.
It goes without saying that this kind of movement presupposes a keen talent for spotting golden opportunities not yet seized by others.
Credit where credit is due, then, but this can make us reflect on the fact that investing even small amounts in emerging businesses can lead to a return on investment that cannot be underestimated.
Clearly, one must be patient. In fact, only in the long run can you have confirmation that you have won your bet.
Where to invest according to Warren Buffett
Certainly, at the time when the economic availability is so high, then one can also afford to acquire significant shares in companies that are already established as well as of high quality.
Again, however, Buffett moves guardedly and has always chosen to concentrate his investments in a small number of companies.
Thus, as opposed to those who diversify their portfolios considerably, Buffett prefers to pick the top ones and carve out his place within them.
A few examples? His Berkshire Hathaway, owns stakes in such globally successful companies as Apple, Coca-Cola, and American Express.
What we can learn from Warren Buffett’s method
There are some valuable lessons we can learn from Warren Buffett’s investments that you can also adapt to our daily realities that are certainly much but much scaled down, compared to his.
First, those who have savings to invest and immediately want to see them grow are speculating not investing. Instead, one must invest with an entrepreneurial mindset. Thus looking at the medium to long term.
Once you are sure of your choice, you must always follow the strategy. Never listen to what Buffett calls the “background noise” i.e., short-term news that paddles against the current. Another fundamental rule not to be lost sight of: you should only invest in what you really understand.
Read also: How to invest to generate a monthly income