Investing like the Best (Know and Do THIS!)
Here is an Investing Hub of information and advice that I learned from the legendary investor himself… Warren Buffett!
The legendary investor, Warren Buffet, once said, “The more you learn, the more you earn.”
Investing is a journey. A journey marred with mistakes, highs, lows (sometimes very deep lows), and best of all, investing is a journey of learning.
Great investors can never predict what will happen tomorrow. Nobody can. But with time and knowledge, they build up an arsenal of options.
Options with different possibilities, strategies, and tools available to minimize risk while positioning themselves for great upside.
The best investors are learners, not finance “experts”.
Here are 9 Secrets that Great Investors have Learned that have made them Wealthy.
1. Recessions are Normal. Be Prepared for it.
There’s recently been a lot of speculation in financial markets about a recession. Recessions occurs every 5–7 years. People are acting as though recessions come in a blue moon and finally we’ve arrived because the US government has created trillions of dollars out of thin air.
Nothing can stop recessions forever according to history. Another 2008 financial crisis will happen. It will hurt people who are unprepared.
What can you do when you know another recession is just around the corner? First, Don’t panic. Second, Expect chaos. Don’t ever put yourself in a position where you have to sell when it’s the worst time to sell.
2. Cash is still King
Before you stop reading because you believe cash is trash, given the inflation rate, let me explain.
One of the easiest ways to prepare for a big downturn in a recession is to have at least 3–6 months in emergency savings so you don’t have to sell your investments.
Or better yet, have enough cash to capitalize on big dips in the market. Volatility and big dips in the market are great buying opportunities.
Some people have an opposing view, believing “cash is trash”. Holding cash is losing money, given the growing inflation rate.
But cash, as we’ll see later, buys opportunity.
Even Warren Buffet holds cash. A lot of it. 144 Billion of it. That’s over 20% of the total value of his company!
3. Margin is Risky but Powerful
Don’t want to stay in a lot of cash? Have a margin account. Margin allows you to borrow money to buy securities if you need it.
Interactive Brokers allows you to borrow margin off of your securities at a very low rate of 1.59%.
You could lose money and owe money though. So make sure you know what you’re doing when you use Margin.
4. Money Buys You Opportunity
It’s hard to deny Money is useful.
It helps you pay the bills. It helps you buy a house. It helps you buy a Tesla.
But beyond what the tangible things it buys, it also buys opportunity. Opportunity is not equal for every person.
Take for example, education. Money can buy you education. Education can help you earn more money.
But what Money also buys you is the opportunity to invest when there’s a recession. It allows you to buy stocks of great companies when they’re cheap.
5. Money Buys You Time
It’s true. Money can’t always buy happiness.
Some of the most depressed people are the ones with a lot of money while some of the happiest people in the world have nothing.
However, what Money CAN buy (aside from a lamborghini, a house, lots of nice things, and so on and so forth is time.
Money buys you time so you can choose to not sit behind a desk and work 10 hours a day if they’re not paying you enough.
But aside from the transactional value of time vs money, money also literally buys you time and time makes you wealthy. Here is how it works.
6. Time Makes You Wealthy
As Warren Buffet also once said, “Time IN the Market beats timing the market every time.”
Generally, so long as you’re not YOLO’ing your money buying weed stocks, your wealth will grow with more time IN the market.
How do you stay invested in an ever changing world with inflation going out the wazoo, price for a gallon of oil being more expensive than a meal, and your kids costing so damn much?
If you’re not rolling in cash from your Grandparents’ inheritance or your rich Dad hasn’t given you a million dollars, it’s okay. You still have a chance.
Did you know you can borrow money off of your stocks? It’s true and it’s what every rich person does. Instead of selling their stocks to pay for their $1000 Tuna Tartare meal, they simply borrow off of their securities.
Sure, they pay a measly 1.59% interest but with a historical average annual return of 10%, that interest is dwarfed by their fat gains every year.
And that is just one reason why the rich only gets richer.
Want to go to an ATM and be able to borrow and withdraw from your stocks? Open up an Interactive Brokers account (with the link below) where you get up to $1,000 in free stocks and play the game of the rich!
7. Fight Inflation with Assets.
Inflation this past year hit an astounding 7.5%. The problem of rising prices caused by inflation and the devaluation of US dollars can only be defeated by the following:
Investing in assets that outpace inflation.
The only way you can beat inflation is investing in assets.
If you can’t afford to buy a house because everyone is bidding 20% over market value and willing to pay cash, that’s okay.
You can still buy crypto.
Just kidding, as always, this is not any kind of financial advice.
But really, you can invest in REITs which stand for Real Estate Investment Trusts that pay fat dividends.
Or better yet, you can trade options, which essentially is a leverage on stocks.
8. Assets Buy you Freedom
Investing isn’t just about getting rich. If you remember what I said earlier, money buys us time.
We want to make money from investing so we can buy back our time.
The process of reaching this level of freedom doesn’t happen overnight. Investing works in the long term, and can be devastating if you only do it short term.
If you’ve been on the journey in investing and learning long enough, one day it gets you to a point where the income of a job isn’t as important anymore. At that point you can work less hours and have the freedom to do whatever you want with your time.
You can spend time with loved ones, travel the world, or start another side business.
Time is designed to be spent however you want. Then one day it runs out and the party is all of a sudden, over. That’s why you shouldn’t waste a single minute.
9. We’re Shaped by What we Learn
Information, Social Media, Speculation, Bots.
Let’s be honest: much of our lives are shaped by social media. From how we see the world, what we believe is important, to even how and what we invest in. Anybody who says social media doesn’t influence them is lying.
A lot of crypto and even stocks are pumped with speculation, social media, influencers, and sometimes even… bots.
Pumping up a stock or even a fake coin is as easy as a group of people sending an army of bots out to artificially inflate the number of comments and shares on the post.
Bottom line: don’t fall for investment hype. Do your own research. And most importantly, keep learning.
Because as Warren Buffet said, “the more you learn, the more you earn.”
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