Warren Buffett is widely considered to be the richest investor of the 20th Century and consistently ranked among the wealthiest people in the world. As well as pledging to give away 99% of his wealth to philanthropic causes, Buffett has a wealth creation and investment philosophy that he has stuck to since his early days. One of the questions he gets asked on repeated interviews is ‘How Can I Get Rich?’.
From his writings and interviews, we have compiled the 10 Ways to Get Rich, According to Warren Buffett.
How Can I Get Rich?
1. Reinvest Your Profits
When you first start a business or trade stocks and make a profit, it’s tempting to spend it. Don’t. Reinvest that money in the stock or back into your business. This will increase your portfolio and help your business grow as your profits grow.
In high school, he and a pal bought a pinball machine to put in a barbershop. With the money they earned, they bought more machines until they had eight in different shops. When the friends sold the venture, Warren Buffett used the proceeds to buy stocks and to start another small business. By age 26, he’d amassed $174,000 — or $1.4 million in today’s money. Even a small sum can turn into great wealth.
2. Be Different
Be willing to go against what everyone else says and thinks you should do. If you pursue the average, your returns will be just that, average. Judge yourself by your own standards and not by everyone else’s.
When Warren Buffett began managing money in 1956 with $100,000 cobbled together from a handful of investors, he was dubbed an oddball. He worked in Omaha, not Wall Street, and he refused to tell his parents where he was putting their money. People predicted that he’d fail, but when he closed his partnership 14 years later, it was worth more than $100 million. Instead of following the crowd, he looked for undervalued investments and ended up vastly beating the market average every single year.
3. Don’t Procrastinate
Be ready to gather all the required information before making a decision and go for it. Don’t hesitate and procrastinate. Dedicate yourself to your goal and stick to your decision after it made. Tell your family and trusted friends about them so they can help you stick to them.
4. Negotiate Before You Enter an Agreement
Your leverage is much higher before you enter into an arrangement. This is when you have something that the other party wants. Always nail down the specifics of a deal before a deal is done, even with family and friends.
Warren Buffett learned this lesson the hard way as a kid, when his grandfather Ernest hired him and a friend to dig out the family grocery store after a blizzard. The boys spent five hours shoveling until they could barely straighten their frozen hands. Afterward, his grandfather gave the pair less than 90 cents to split. Warren Buffett was horrified that he performed such backbreaking work only to earn pennies an hour.
5. Take Care of The Small Expenses
Known as a frugal man, despite his vast wealth, Buffett looks for managers who also obsess over the smaller expenses. Exercising vigilance over every expense can make your profits and your paycheck go much further.
6. Limit Your Borrowing
Living on credit cards and debt won’t make you rich. Borrow as little as possible, and where you can, start a business with as little capital as possible. If you have debt, negotiate with the creditors and pay back what you can, and when your debt free, save money that you can invest
7. Be Persistent
By being the most motivated and persistent, you can beat any competitor. Tenacity and persistence are Buffett’s most valued attributes in a business owner. To have the courage to work harder and longer than anyone else is willing to will make you richer, period.
8. Know When to Quit
Know when to walk away from a loss, and don’t let anxiety fool you into trying again. Gamblers have a habit of trying to recoup their losses by gambling some more, and before they know if, they’ve lost a month’s earnings.
When Warren Buffett was a teen, he went to the racetrack. He bet on a race and lost. To recoup his funds, he bet on another race. He lost again, leaving him with close to nothing. He felt sick – he had squandered nearly a week’s earnings.
9. Get Good as Assessing Risk
When you’re struggling to make a decision, put yourself through all the worst- and best-case scenarios possible. Then ask yourself ‘Am I willing to take that risk?’ and if you’re not, get out. Getting good at knowing which risks to take and which to pass up will make the biggest difference for you. Know when to walk away from a loss, and don’t let anxiety fool you into trying again.
10. Understand What Success Really Means
Warren Buffett understands what real success is. It’s not measured by the amount of dollars in your bank account, because if it was, he wouldn’t have given almost all of his wealth away. He says ‘When you get to my age, you’ll measure your success in life by how many of the people you want to have love you, actually do love you. That’s the ultimate test of how you’ve lived your life.’ True success is impacting people’s lives and living your life to your full potential. Then you can say that you did your best.
Some Other Ways of Becoming Rich
Each person on this earth has a right to become successful and become rich. But in today’s world people generally forget the way to success and have no guidance in respect of how one can become rich by following some basic rules which are important for becoming a millionaire or a billionaire.
Here are some easy and quick ways that are written down for people who are have the aspiration of becoming rich and successful people at light’s speed.
1. Spending
Any person can become rich by using the magical formula of spending less than their earning or compromising on their living standards. Lot of people is burdened with bad debt in spite of earning plenty of money. Such people are the ones who don’t have the control on their rational spending and tend to forget the important factor in becoming rich is having control on the spend rather having big salaries.
Learn How You can be capable of acquiring the Formula to be rich, replica exactly what the rich and successful people are doing to accomplish monetary success, and stay wealthy All Your Life!!!
Compromising on your standards is not cutting down on your basic needs, it simply means that you need to consider that your monthly earning is 100$ when actually it is 150$ and 150$ when your earning is 200$. That extra 50$ needs to be saved which in return makes you wealthy.
If you start living and spending exactly of what you have been earning, one fine day you would realize that you have spent everything what you have earn and would finally break.
2. Get rich slowly but surely
If you happen to meet any millionaire or billionaire do ask them the reason and the secret of being wealthy. The common answer that you would receive from all these people would be “Getting rich mentally” as it is one of the important factors required to be actually wealthy.
Depending on the hard work and luck many people increase their income very fast way but none of them become rich just by winking their eyes or get promoted monetarily thousand times in couple of days.
Please find below some pointers that are based on all these facts and are quick tips for being rich: –
- Having your own business, as you can’t become a billionaire by working for someone else.
- Don’t ever dream or think of becoming a millionaire in two years.
- Have a control on your spending and do some kind of savings.
- Compromising on your standards.
- Having knowledge on the current affairs and specifically about marketing.
3. You Are What You Thinking Can Change Thoughts for Success
The life that we are living is the one that is been created by our thoughts. By improving our thoughts, we can improve our standard of living.
The right thinking starts with the right kind of words that we say to ourselves. Being the architects of our own lives, unintentionally we create pain and problem for own selves because of unconscious thoughts we generally focus on.
Rich people generally think of themselves being rich and wealthy and then finally having it all. By thinking positive they are motivated to go after real time challenges and big bread and having a lifestyle that they have desired for. You can also have a leisure life if you are focused and clear on the goal what you want to achieve.
4. Think and Grow Rich Can Help You Become Rich
Some people are in their own hallucinated world that by taking more time and acquiring higher studies they will have a higher opportunity of earning big money. They learn all the aspects of business-like sale and marketing, operations, finance, logistics etc. What they casually forget that if by acquiring one special knowledge they can become specialist and master of that field.
So, if by any thoughts if you are planning to become a specialist at anything, ensure that you are quite strong in terms of financial literacy first before investing in other fields.
Think and Grow Concept has brought in many changes in the lifestyle of many people for their betterment and we are sure for the fact that it will bring a change in your lifestyle as well. Work with an open mind and accept the reality that you are the soul person responsible of your mind, which means you are responsible for your own future.
5. Science of Becoming Rich Implements What the Rich Use to Get Richer
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By doing things in a designed way the person attains the ownership of money and property what he is being dreaming of. People who do things in a right way, whether with a reason or unintentionally finally earn money and become rich. People who fail to do things in the desired way, no matter how much effort is been put in they never become rich.
Certain proven methods are essential for attaining financial success. The globally and naturally proven law that like causes always by default produce like affects. Therefore, any human being whether man or woman, who knows the art of doing the things in the desired way infallibly become rich.
Does Earning a lot of Money Make You Wealthy?
Most people believe the terms “wealthy” and “high-income” are the same. Surprisingly, most high-income earners are not wealthy; although they earn a lot of money, they don’t keep much of it. To be wealthy is not to amass material possessions, but to increase net worth by collecting appreciating assets.
Factors That Separates Wealthy People from The Rest
1. They live well below their means
Control spending by creating an artificial economic environment of scarcity. Pay yourself first by investing at least 15% of income before spending on anything else.
Minimize realized (taxable) income, maximize unrealized (non-taxable) income.
Sacrifice high consumption today for financial independence tomorrow.
Get a mortgage less than twice your annual income.
2. They allocate their time, energy, and money efficiently, in ways conducive to building wealth
Save and invest early. An early start with low income can outweigh a late start with high income.
Invest at least 15% of gross/pretax income.
Follow a budgeting and plan your finances.
Invest passively with a buy-and-hold method to reduce capital gains and turnover.
3. They believe that financial independence is more important than displaying high social status
Dollars are like seeds; you can consume them or plant them to grow.
4. Their parents did not provide economic outpatient care
The more dollars adult children receive, the fewer dollars they accumulate. Those forced to provide for themselves tend to be wealthier than those who are given financial aid.
5. Their adult children are economically self-sufficient
Helping the financially weak generally makes them weaker.
6. They are proficient in targeting market opportunities
Offer goods and services to the affluent. Although they’re often frugal concerning consumer goods and services, they’re not as price-sensitive about investment services, accounting services, tax advice, legal services, medical care, educational products, homes, and products and services for their businesses.
7. They chose the right occupation
Sell your intellect; it’s portable across industries and geographic locations.
