Looking for investment mantras? Here are Warren Buffett’s 5 pearls of wisdom (2024)

FAQs

What are Warren Buffett's 5 rules of investing? ›

A: Five rules drawn from Warren Buffett's wisdom for potentially building wealth include investing for the long term, staying informed, maintaining a competitive advantage, focusing on quality, and managing risk.

Buy the business, don't rent the stock

After all, Buffett made 99% of his personal fortune after he'd turned 50. He says the trick to training your long-term-oriented mind is to think like a business “owner”, and not just a “renter” of its stock.

Be fearful when others are greedy. Be greedy when others are fearful.” Few quotes provide as much insight into the mind of Warren Buffet as this one. In this famous quote, Buffett reflects on an important fact: humans are naturally irrational.

His penchant for long-term investments is reflected in another of his aphorisms: “You should invest in a business that even a fool can run, because someday a fool will.” He doesn't believe in businesses that rely for their success on every employee being excellent.

"Rule No. 1: Never lose money. Rule No. 2: Never forget Rule No. 1."- Warren Buffet.

Warren Buffett once said, “The first rule of an investment is don't lose [money]. And the second rule of an investment is don't forget the first rule.

CEO Warren Buffett is a leading proponent of short-term Treasuries. Berkshire is one of the largest T-bill investors in the world, holding $153 billion at the end of the first quarter, the bulk of its $182 billion in cash and equivalents.

plural pearls of wisdom. : a wise word or statement. He offered some pearls of wisdom about raising children. often humorous. A crowd of reporters gathered around the coach after the game to hear him dispense his usual pearls of wisdom.

In 2008, amid one of the most severe financial crises in recent history, legendary investor Warren Buffett, chairman of Berkshire Hathaway, shared a piece of timeless wisdom that would resonate with investors for generations to come: “Be fearful when others are greedy, and be greedy when others are fearful.”

“When something is important enough, you do it even if the odds are not in your favor.”

What does Warren Buffett recommend for retirement? ›

According to Buffett, you should invest 90% of your retirement funds in stock-based index funds. According to Buffett, the remaining 10% should be invested in short-term government bonds. The government uses these to finance its projects.

In the interview, he said the Berkshire shares would go to philanthropy. Part of the cash would go directly to his wife and part to a trustee. He told the trustee to put 10% of the cash in short-term government bonds and 90% in a low-cost S&P 500 index fund.

The Buffett Rule is the basic principle that no household making over $1 million annually should pay a smaller share of their income in taxes than middle-class families pay. Warren Buffett has famously stated that he pays a lower tax rate than his secretary, but as this report documents this situation is not uncommon.

This sort of five percent rule is a yardstick to help investors with diversification and risk management. Using this strategy, no more than 1/20th of an investor's portfolio would be tied to any single security. This protects against material losses should that single company perform poorly or become insolvent.

The 5% rule says as an investor, you should not invest more than 5% of your total portfolio in any one option alone. This simple technique will ensure you have a balanced portfolio.

The rule's origin is reported as advice given by Buffet to his personal pilot, Mike Flint. Flint asked Buffet for career advice, leading to Buffet thinking of the 5/25 rule. Buffet asked Flint to list his top 25 career goals, pick the top five, and avoid the rest until the top five are achieved.