Warren Buffet is one of the best Investor in the world. Warren Buffet started investing into stock market from very young and become millionaire at the age of 25.
Buffett have an interest in business and investing at a young age. He was inspired by a book One Thousand Ways to Make $1000. He showed his business skills by selling chewing gum, Coca-Cola, and weekly magazines door to door.
Warren Buffet : Top 5 Rules to Become Better Investor
This advices warren buffet share for new and young investor for those who want to earn huge money from stock market.
1) Never Loss Money, Never Forget Rule No 1
Investor take stock market as a get rich quick scheme and invest into some cheap prices stock means penny stocks and loss money because penny stock already fall due to their business fundamentals.
He suggest invest into only those businesses that have less P/E ratio and high growth. Making huge money is good but if you loss all your money then you need to start from beginning. When you have more money in your portfolio, you can compound your gains even faster.
2) Be Greedy When Other Are Fearful
When bull market comes everyone talking about stock market and invest at very high valuation but when stocks corrects 30-35% they sold stocks and take huge losses.
Invest into stocks when valuation is less means in bear market everyone selling their quality stocks at very cheap levels you need to take advantage of this opportunity.
Be greedy when others are fearful about stocks and be fearful when others are greedy, sell your high P/E ratio stocks.
Also Read :- How Compounding Works In Stock Market ?
3) Buy Wonderful Company At Fair Price
Some investors have less money to invest then they change their focus on cheap quality stocks rather than monopoly stocks.
Buy wonderful company at fair price rather than buying fair company at wonderful price meaning some people only focus on those business that have no advantages and already close to bankruptcy. For example Reliance is good quality stock buy reliance when valuation is low rather than buying Vi at low price.
4) Never Invest All Eggs into One Basket
Never Invest your hard earned money into one business because when one business fail then you loss all money.
Diversify your investment. Create portfolio and invest into minimum 3-4 stocks. When one stock become zero then your other three stocks will helps to servive in markets.
5) Warren Buffet : Invest for Long Term
If you aren’t willing to own a stock for 10 years, don’t even think about owning it for 10 minutes. When you know company very well then invest only for long term because long term investing have competative advantage over traders
The smart investor should also assess a stock by the company’s strengths and weaknesses, looking for long-term advantages it can win within its industry.