Warren Buffett is a big name in the investment world. People are paying attention to his story, which boasts a net worth of $114.2 billion. From picking small businesses to not sweating when stock prices drop, here's Buffett's advice for investing $10,000 if you want to get rich.
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start early
First and foremost, Buffett recommends getting started early when it comes to investing to take advantage of the power of compound interest. He describes the power of compound interest as being like making a small snowball and rolling it down a very long hill. As the snowball rolls down the hill, more and more snow accumulates until it becomes a giant snowball.
When someone asked him at the annual shareholder meeting how he could make billions of dollars, Buffett replied: “The trick is to have a very long slope. That means either starting very young or living very old.”
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Investing in small businesses
Buffett recommends investing in small and medium-sized businesses. Large investors and funds like Buffett tend to focus on large companies, which means there's less competition for smaller stocks and someone with $10,000 can find hidden gems. means.
Nevertheless, Buffett said the only way to make more money is to buy some of the best companies, or stocks, at attractive prices.
Mr. Buffett says that if you are fresh out of school and have $10,000 to invest, start with companies with names starting with “A” and work your way down the list, focusing on smaller companies and choosing the companies you want. He said he would find it. Invest.
No need to worry about stock prices going down
“If you're going to do something stupid just because the stock price is going down, then you shouldn't own stocks at all,” Buffett said in an interview with CNBC. He made it clear that it would be foolish to sell stocks just because the price has fallen.
Buffett said it was inevitable that stock prices would go down at some point, but there was no need to worry about it. “The key is to buy what you like at the price you like and hold it for 20 years,” he said.
Buffett said you shouldn't look at your stocks every day. “Even if he buys a farm or an apartment complex, he doesn’t get quotes every day, week or month,” he said. “So it's a terrible mistake to think of stocks as moving up and down, and you need to pay attention to the ups and downs.”
Additional advice from experts to invest $10,000 to get rich
said Robert R. Johnson, Ph.D., CFA, CAIA, professor of finance in Creighton University's Heider College of Business. People should invest in low-fee, diversified stock index funds and stay invested whether the market is up, down, or sideways.
“Dollar-cost averaging into index mutual funds and ETFs is a great lifelong strategy. Dollar-cost averaging is a simple technique that invests a fixed amount of money in the same fund or stock at regular intervals over a long period of time.” For many investors, the KISS credo – keep it simple and stupid – should guide their investment philosophy.”
“Warren Buffett built his empire by investing in boring, staid companies like See's Candies, Dairy Queen, and Nebraska Furniture Mart,” Johnson said of Buffett. These companies may not be the sexiest, but they are doing well…
“Consistency and patience are virtues associated with accumulating wealth over the long term.'' Jeff Bezos once asked Warren Buffett, “You are the second richest person in the world, but you are the second richest person in the world. I have a simple investment theory.'' Why haven't others followed this? Warren Buffett replied, “Because no one wants to get rich slowly.'' What Buffett is referring to here is his philosophy of investing in good companies, staying invested over the long term, and letting compound interest work its magic. ”
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