Warren Buffet is a great investor.
In case you don’t know who he is, Wikipedia gives us a good summary:
Warren Edward Buffett (born August 30, 1930) is an American business magnate, investor, and philanthropist. He is considered by some to be one of the most successful investors in the world, and as of March 2017 is the second wealthiest person in the United States, and the fourth wealthiest in the world, with a total net worth of $73.3 billion.
His net worth alone tells us he’s a great investor.
To become that great at investing, he used a strategy.
I have good news. His strategy is pretty simple and you can apply it to anything you buy.
What is Warren Buffet’s Investing Strategy?
His approach is to be really sure of something before he buys it, and one of the ways he exercises that discipline is to sort of almost never sell. Not never sell, because he does sell stocks, but he sort of says to himself, ‘I know I’m almost never going to sell it, I’ve really got to like it before I get into it,” Buffett’s biographer Roger Lowenstein, author of “Buffett: The Making of an American Capitalist,” explained to Yahoo’s Alexis Christoforous.
“It’s not the not selling that makes these so good, it’s that discipline to buy things only when he really, really likes them,” Lowenstein says.
This is an excerpt taken from this CNBC article and that book link is my affiliate for Amazon.
As Roger Lowenstein says, Warren Buffet’s strategy is to almost never sell anything.
So when he buys an investment, he has to be really confident that he will still be happy with it 20 years from now.
That’s why he bought Coca-Cola and See’s Candies.
He purchased See’s Candies with longtime business partner Charlie Munger in 1972 and spent more than $1 billion on Coca-Cola stock in 1988 — both of which turned out to be good bets and both of which he still owns today.
Those two were solid investments.
How Can You Apply Warren Buffet’s Investing Strategy To Your Purchases?
Believe it or not, Warren Buffet’s strategy is a great strategy for anything major you purchase.
That’s because transaction costs eat your lunch.
Take for example buying a home.
The last time I moved, I spent $9,000 in commissions on the sale of my old home and $8,800 on transaction costs to buy my new home.
If I did that every 5 years, I would spend $107,100 in transaction costs over 30 years.
And I wouldn’t have a paid off house at the end of 30 years.
If I stayed in my home 30 years, I would have saved $107,100 in fees and a mortgage-free home.
That’s how Warren Buffet’s investment strategy would help you.
Here’s Some Bonus Advice From Warren
Buying for the long-haul is simple but powerful advice.
And I bet that most people won’t use it.
It takes discipline to live in that same house for 30 years.
When all your friends are upgrading and your not, it’s difficult to not feel bad.
So you have to be really comfortable with your purchases before you buy them.
And act like you will never sell them.
What other purchases will this strategy apply to?
Let me know in the comments below.
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