When it comes to investing, take it from Warren Buffet, Invest in What You Know. in other words, Keep It Simple (KIS, I leave out the last 'cause I don't like calling anyone stupid). If you don't know, Warren Buffet is one of the wealthiest men in the world. He is also one of the greatest value investors of our time. Don't just do what he does, listen to his strategies along with others and develop your own.
If you don't know anything about stocks, don't invest in individual stocks. Use index funds to take advantage of market returns. If you don't know what index funds are, put your money in a savings account until you figure things out. If you don't know what a savings account is, take your money and get a bus ticket/metrocard/token and get down to the library and start reading.
Too many times I read about people, my younger self included, who try to "read" the market for the latest trend. Looking for the next hot stock is not going to get you anywhere, invest in what you know. If you like Coca-Cola drinks, read up on the company and look at how they've done in the past. Look into their financials after you've read a little on financial statements. If you still like what you see, put some money into Coca-Cola. If you like to shop at The Gap, do the same thing.
Don't listen to people on television or in the newspaper talking about foreign oil companies, REIT's, or companies on the rise. If you don't know what they do or how to read the financials, save your money.
The article I linked to on top talks about Buffet's major strategy when investing:
That's it, "If I don't know, I don't invest". Its that simple. The article is from 1999 but the lessons still ring true today. Keep your money in savings, do your research and just let your money grow until your ready to make a move. If that's an IRA, good, if you want to start a DRIP (Dividend Reinvestment Plan) with 1 or a few companies, fine, if you decide that your money is safest in CD's, go for it.
You may not want to go this route (CD's) if you do your research right, index funds will be very attractive, but don't listen to me. I'm just another guy. You may not agree with Buffet and invest in internet stocks, as long as its your strategy and you feel like your ready, that's fine. KIS, keep it simple and you'll go a long way. Start saving now and get your battle plan ready. You can expand you investments as you go along. Keep reading and researching different avenues to take with your money as time goes on. Jonathan over at My Money Blog has a nice post on using a "Core and Explore"strategy.
If I can give one small bit of advice, two words: Diversify and Consistency. Mix it up, but not too much, and be consistent. Invest steadily and you will be rewarded.
Thanks for reading
I love you Baby
Labels: Personal Finance
That's one thing I like about Warren Buffett, he is a long term investor and he concentrates on companies that he believe in.
It should be easier to invest in a company stock in which you constantly buy their products,
than investing in a company that you hear is a good buy. right? When you KIS, you can relax and breathe with ease.
Yes, go into an investment only when you have done the necessary research and avoid if you are not familiar or have doubts about it. Most time, we tend to think we understand but in fact, we don't understand fully. We are also at times driven by our emotions as we react to hearsay and hype. It's never wise to invest based on emotions.
Investing should always be simple so that there wont be any complications in the coming time and no one has to face the difficulties
Consistency is really important . You are right. Thanks for such post.
Buffet is surely a investment guru and he always accentute on the importance of the investing simply.This article is really very nice and entertaining to read.
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