Buffett got his start selling sticks of Juicy Fruit gum as a kid in the mid-1930s, and ultimately became the world’s greatest investor. What follows is a list of things that he’s learned along the way…
- Reinvest your profits. When you make money, reinvest your profits instead of spending them. Even a small sum can ultimately be turned into great wealth.
- Be willing to be different. Don’t base your decisions on what everyone else is saying or doing. Think for yourself if you want to be above average.
- Never suck your thumb. Do your homework, and be prepared to quickly make up your mind and act on it. Avoid unnecessary sitting and thinking.
- Spell out the deal before you start. Your leverage is always greatest before you begin a job. Always work out the specifics of a deal before you start, even if you’re dealing with friends or family.
- Watch small expenses. Be vigilant about minimizing your expenses, both in business and in your personal life. By doing so, you’ll ensure that you profits or paycheck go further than ever before.
- Limit what you borrow. You can’t borrow your way to wealth, so be careful with loans and credit cards. And if you get in over your head, negotiate with your lenders to pay what you can. Once you’re debt free, save money and start investing.
- Be persistent. With tenacity and ingenuity, you can win against a more established competitor.
- Know when to quit. Know when to walk away from a losing proposition. There’s no sense in repeating the same old mistakes trying to dig yourself out of a hole.
- Assess the risks. When faced with a decision, imagine the best- and worst-case scenarios. If the benefits don’t outweigh the risks, then think twice before proceeding.
- Know what success really means. There’s more to life than money. According to Buffett, “When you get to my age, you’ll measure your success in life by how many of the people you want to have love you actually do love you. That’s the ultimate test of how you’ve lived your life.”
It’s pretty simple, really. Spend less than you earn, invest regularly, don’t go into debt, don’t take unnecessary risks, and stick to it. There are no magic bullets.