Investor Spotlight: Warren Buffett

Investor Spotlight: Warren Buffett

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Warren Buffett is believed to be one of the greatest investors in history. Learn how $40 can be turned into $10 Million and his secret to winning.

Warren Buffett is the CEO and Chairman of Berkshire Hathaway. Buffet alone has a net worth of around $US70 Billion, and as a result from his strong financial insight into business is widely acknowledged as the world’s greatest investor and teacher of finance. A notable example of what Warren Buffett has taught is seen from his idea of a $40 investment towards Coca-Cola’s stock during 1919. The concept goes, a $40 investment in 1919 would be translated into over $10 million dollars today!

We have broken down Warren Buffett’s idea into three elements:

Patience

Ok, understandably $40 in 1919 is very different to $40 in 2015. However, even after factoring in the rise of inflation over a 96 year period, this figure only turns out to be $540 in today’s terms – that’s the cost of an iPhone 5 or a really, really expensive cup of coffee. But put it differently, this figure is affordable. Another element to consider is that Coke wasn’t a global giant back then and was undergoing brand growth – an opportune time to invest.

Investing

Investing is not placing a bet on a racehorse or a football match. It’s buying a tangible piece of business. Before any investment happens it’s critical to understand the relative price you are paying for that business. What isn’t important, Buffet argues, is determining whether you are buying at the right time or not.

Warren Buffet believes that you shouldn’t be looking within the previous 200 days of stock performance, instead making the importance of buying the right company at a fair price.

Timing

As you will find as you read more of this remarkable individual, Warren Buffet continually notes that it is terribly dangerous to attempt to time the market.

“With a wonderful business, you can figure out what will happen; you can’t figure out when it will happen. You don’t want to focus on when, you want to focus on what. If you’re right about what, you don’t have to worry about when.”  – Warren Buffet Quote

Instead of judging when to buy shares, you should be shifting your mindset to focus on what shares to buy. And when you find the right company, buy immediately. Often we are stumped as to when the right time to buy is… Warren Buffet believes that the right time to buy is always today.

You may not be a millionaire just yet, but you can start making financial decisions that help set targets for planning and budgeting. Check out how to Write a Financial Plan Today!

 

Disclaimer: Financial Mappers does not have an Australian Financial Services License, does not offer financial planning advice and does not recommend financial products.

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