When it comes to seeking out a financial advisor, you could do worse than to invest your time learning from one of the richest men in the world. Warren Buffett, sometimes called the “Oracle of Omaha,” has built an impressive fortune and net worth through his astute investment decisions. His wisdom and long-term insights have been instrumental in guiding many toward financial success with both saving and investing goals.
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Though his success and investment portfolio speak for themselves, it may be time for the working generation of millennials to delve into the billionaire’s sage investment advice and principles to efficiently achieve financial freedom. Here is Buffett’s advice for millennials aiming to build wealth.
The More You Save Now, the More Wealth You Have Later
Begin accumulating wealth as soon as possible by investing your money wisely. This principle is derived from the concept of compounding, which Buffett says is the key to his wealth. Compounding involves earning returns on your investments, resulting in exponential growth over a long time.
The earlier you start investing, whether it’s the stock market or real estate, the more time you give your investments to compound, which results in significant growth. Buffett’s emphasis on understanding the value of time is crucial. According to him, if you invest early in your education and accumulate knowledge that builds on itself, you can achieve powerful results in the future.
Teach Yourself the Basics
Buffett highlights the importance of understanding accounting principles and financial literacy in general. As the language of business, these principles provide invaluable insights into a company’s worth and progress. This is a key starting point for evaluating a business.
If you have a low-risk tolerance, you don’t have to start with index funds right away, you can start simply by earning high interest rates on deposit accounts. For example, think of the competitive advantage you have over your finances if you simply had started a high-interest money market account 20 years ago. You can begin slowly while you educate yourself on other best practices and investment strategies.
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Choose Your Investments Wisely
Buffett’s approach to investing involves extensive research on potential stocks but selecting only a few to invest in. His philosophy is to be highly selective in choosing where to invest capital. While his portfolio may not be as diversified as other billionaire investors, you can’t argue with his investment returns.
His former business partner, Charlie Munger, was also no slouch in the investment department. Munger was famous for believing you make your money by waiting. He said, “If you skillfully follow the multidisciplinary path, you will never wish to come back. It would be like cutting off your hands. Spend each day trying to be a little wiser than you were when you woke up.”
Avoid Excessive Student Loan Debt
Buffett cautions about the financial burden of a college education. He believes the value derived from advanced education depends more on the individual than on the school. For millennials who are one of the first generations to deal with excessive student loan debts, Buffett encourages thoughtful consideration of the cost and time involved in pursuing a college degree, suggesting that advanced degrees aren’t necessarily for everyone.
Investing in yourself is always money well spent, but make sure you aren’t just pursuing MBAs or PhDs because you don’t know what next step to take. It’s not worth spending money on tuition if you don’t have a career path in mind that can pay for it.
Surround Yourself With Successful People
Buffett believes in the power of influence. He advises millennials to surround themselves with people who embody the qualities they aspire to have. He emphasizes the impact of one’s spouse on their life and aspirations.
During a 2017 discussion with Bill and Melinda Gates at Columbia University, Buffett said, “You want to associate with people who are the kind of person you’d like to be. You’ll move in that direction. And the most important person by far in that respect is your spouse.”
Seeking a financial mentor is also on Buffett’s bucket list of advice for millennial investors and he emphasizes the importance of having a mentor during your financial journey. He studied economics and finance in college and worked with Benjamin Graham, who greatly influenced his investing principles.
Get-Rich-Quick Schemes are Short-Term Scams
Millennials have been through a lot of hard economic times, and it always seems like the next financial shoe is about to drop. However, that aside, Buffett advises against the lure of get-rich-quick schemes. He maintains a skeptical view of cryptocurrencies, expressing concerns about their value and stability as long-term growth is much more stable than short-term trends.
Following these principles can help you successfully navigate your financial decisions. As Buffett’s journey illustrates, the road to wealth is not a sprint but a marathon that requires patience, discipline and sound decision-making.
Instead of flashes in the pan, Buffett suggests investing in proven, reliable companies rather than risky, untested ones. He personally holds shares in well-known companies such as Coca-Cola, Johnson & Johnson and Proctor & Gamble.
Final Take To GO: Seize Opportunities Aggressively
The bottom line is that Buffett urges millennials to seize opportunities when they arise. His philosophy is that when opportunities present themselves, it’s important to take full advantage, rather than being overly cautious. Buffett is known for saying, “Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble.”
You also don’t just have to think about your money in the big picture, but also your mind and body. All your investments, whether they involve your physical or financial health are important in the long run. If you’re a millennial who finds yourself at a financial crossroads but wants to get rich, Buffett encourages treating your body like the only car you’ll ever own, because when it’s well maintained, slow and steady wins the race.
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This article originally appeared on GOBankingRates.com: Warren Buffett’s Advice for Millennials Who Want To Get Rich
