Warren Buffett, the world’s richest man, is not rich because of his ancestral properties but he became rich because of his investment ideas, schemes, which are done with the utmost perfection. Buffett sells his investments when the world buys and he invests when the world sells.
Here are the top 10 investment ideas by Warren Buffett that can multiply your wealth using your existing investments.
- Invest in a familiar plan
- Invest in quality business
- Hold investments for a longer period of time
- Portfolio diversification
- Do not rely only the financial news
- Stay consistent
- Price of share vs Value of share
- Invest in best companies
- Low index funds are sensible investments
- Make a safe investment
1. Invest in a familiar plan
Trust your intuition and make your investment decisions. There are few investment plans which can provide you with the best returns under single investments. These investments can be too difficult to handle sometimes and the result will be that you will lose everything in the process of investing. Make your investment plans with the knowledge that you have in that asset.
2. Invest in quality business
It is difficult to make a decision to invest in a startup company and everyone will hesitate to make investments. Everyone wants to invest in the best performing company and it is a good strategy that will make your invested money safe. You will get the best returns on your investments when you invest in a successful company.
Even if you’re making an investment in a startup company, if you are sure that company will make good profits with its qualified products and services to customers, you can invest. In the future, over a period of time the stock value will fairly increase and you can get good returns.
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3. Hold investments for a longer period of time
If you are buying and selling the shares of a company on the same day it can affect your investment and it is not a guaranteed returns strategy. You can buy stocks of greater value and hold on the same. The value of shares will increase over a period of time, invest in shares with good market value and you can enjoy the returns on your investments. You can get better dividends and earn more from your investments over a longer period of time. Share markets can be profitable if you plan your investments wisely.
4. Portfolio diversification
Diversification is a technique to reduce your risk. Investors can get many advantages if they invest the stocks in different companies. If the stock of a single company goes down because of the economic slow down then it will directly affect profitability of the company. If you have made all the investments in one company then a change in external environment can directly affect the company. It will result in loss of dividends and returns on your investments.
5. Do not rely only on the financial news
Having a good market knowledge and keeping yourself updated on market developments is a good investment strategy. However if you’re making investment decisions only based on the financial news then it is time to think over again. The stock values will increase over a period of time and fall suddenly because of any news on external factors. Do not rely only on the financial news, you should consider various other factors and do your own research and gain knowledge about the company. After a thorough analysis you should make an investment.
6. Stay Consistent
Be focused and consistent with your investment plans. Investing money is not a difficult task but all you should have is patience. When the share value increases you should decide to sell your shares. Do not sell your shares for small gains if you are staying consistent you can anticipate to increase more returns on your investments. Do not sell your shares for the sake of small profits, always remember consistency is the key to investment success. If you have consistency then your investments will yield higher returns over a period of time.
7. Price of share vs Value of share
The prices of shares will keep changing every second. To find out the value of a company based on price it carries there is no relevance with the amount of investments that you make. During the financial crisis some investors have gained more profits and have become successful and on the other hand some have lost their investments. Some investors have lost their whole investments and become bankrupt. The truth behind stock values changing up and down has no relevance with the value of investment. Learning the difference between price of share and value of share is a factor that cannot be ignored.
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8. Invest in best companies
Make the right investment in the best companies, being an investor look out for the company that has resulted in providing good returns over the years. Small companies with success in a short period of time can vanish quickly. It is best to look for companies which are consistent in providing the returns and only then you have to make the investment. Earning from investments is not like winning a lottery, there are various factors you should consider before making your investments and only then you can earn good returns.
9. Low index funds are sensible investments
Making your investment in a low value index can give you good returns in the long run. Making investments in government sponsored schemes, government bonds, gold deposits and others can be very good and safe investments. When you are investing your money in equities or mutual funds which can gain your high returns can also bring you higher losses. There is an element of risk associated with these investments.
10. Make a safe Investment
Companies that have great business principles will always prove to be safe investments. When you are making investments it is important to also safeguard your investments. Very few companies keep their ethics high and share dividends to their shareholders. Companies make false promises and do false advertising strategies to entice investors. Keep a look at these companies and stay away from them. Make a safe investment and earn good returns on your investments.
About the author
Vinay Kumar Goguru is a finance professional with more than 8 years of diverse experience as a researcher, instructor and Industry work experience with both public and private entities. Prior to MyMoneySouq, he spent 6 years in Berkadia, It's a commercial mortgage banking company. He has a "Doctoral Degree in Commerce" and two master's degrees with a specialization in Finance, one as Master of Commerce and other as Master of Business Administration. He has written several articles on personal finance, published by different International journals. He loves traveling, reading and writing is his passion. He has a dream of writing a book on his favorite finance topics.
