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"The most important quality for an investor is temperament, not intellect. You need a temperament that neither derives great pleasure from being with the crowd or against the crowd." Warren Buffet

There’s hardly a single person that you will meet that hasn’t heard of the famous American businessman, Warren Buffet. With a net worth of $72 billion in early 2020, this man is known as one of the most influential investors today. He’s also the Chairman and CEO of Berkshire Hathaway and the third-wealthiest person in the Forbes 400.

Buffet has been in the financial game since he was 11 years old. That’s right; this 89-year-old has decades of experience that has transformed him into the business tycoon, philanthropist, and investor that he is today. That’s why his words, ways, and wisdom are of such high value: he didn’t come up with them overnight.

Buffet is a living example of how age doesn’t determine your potential to be successful. 94% of his existing wealth was attained after the age of 60. Young or old, it’s always about ideas, methods, smart decisions, and being passionate.

In fact, Buffet has been a billionaire since the 1990s. Since then, he has gathered an expansive understanding of making more money, investing in the right places, and making sure he does not incur any losses on his accumulated wealth.

That’s a world of knowledge that we can learn from when planning on running businesses and startups of our own, whether it’s learning about failures or about picking yourself up and continuing to pursue your goals.

While it’s obvious that Buffet has more money than you, what is it about this man, his habits, and his personality that has made him an icon for so many of us who are wishing to make it big in the real world? Here’s what you need to know about how Warren Buffet made his money.

His words

He believes that communication is key

Buffet states that you’re never going to become a successful leader that people want to follow unless you have the words, and the power in those words, to be seen and thought of as someone with a plan.

You have got to be confident in what you convey to others, especially your team, because that is the only way to navigate a sticky situation and let other people know that you are focused, deliberate, and well-versed in the decisions you make.

He speaks his words into existence.

When Buffet was a young teenager, he told a family friend that he would become a millionaire by the age of 30, or he would “jump off the tallest building in Omaha,” and it’s safe to say that he worked day and night to bring his dream to life. It’s important to remember that having one goal in life is much more advantageous than having several goals.

When you have a specific goal, it helps you stay focused, make decisions and changes in your life relevant to the goal, and have more clarity about what you need to do to work towards what you want.

Buffet had a goal of becoming a legendary businessman with a legacy that would influence people for generations, and he manifested that goal until it became a reality. Don’t be afraid to speak about your dreams out loud because once the universe knows what you’re aiming for, it automatically opens doors to opportunities you wouldn’t have seen before.

His ways

He’s always keen to learn more

You cannot possibly remain in the same mold of the person you currently are and still wish to reach greater heights and explore your true potential. There’s always an immense amount of space for more learning, more knowledge, and more ideas to fill your mind.

One of Buffet’s winning habits that have ensured he stays at the top of his game, no matter how many changes, twists, and turns the financial economy goes through, is his keenness to learn more. He’s always reading as much as he can about the industry he’s interested in, which is business and accounting.

Buffet claims that he spends almost 80% of each day reading, which, according to him, means 500 pages a day.

“That's how knowledge works. It builds up, like compound interest. All of you can do it, but I guarantee not many of you will do it.” Warren Buffet

He never decides without thoroughly investigating precisely what he’s investing in. Whether that means reading about potential investments, looking into the histories of the businesses he plans on investing in, researching the investment process, or understanding exactly what his advantages are if he proceeds.

Despite being cautious, he also strongly believes in exploring what the prospects of a company are, as he said, “the investor of today does not profit from yesterday’s growth.”

He’s smart about where he’s investing.

You can’t just keep investing wherever you see an opportunity. According to Warren Buffet, if you train yourself to imagine you only have 20 slots to invest in throughout your life, you will make smart investments.

The 20-slot rule claims that when you have downsized your focus on 20 investments, each investment will be 100% well-thought-out and beneficial for you. You will also be able to make sure all the investments benefit each other and function as a network that keeps itself afloat.

“Buy a stock the way you would buy a house. Understand and like it such that you’d be content to own it in the absence of any market.” Warren Buffet

He doesn’t spend lavishly.

This may seem surprising, but Warren Buffet still lives in the same house he bought back in 1958 for $31,500. He loves McDonald’s and Dairy Queen and drives a car much older than he can afford (basically any car). This is because he doesn’t consider the accumulation of wealth as an allowance to spend lavishly.

Letting greed get the better of you may seem worthwhile for a brief moment. However, there are several repercussions, such as the risk of becoming impatient and reckless in your investments because you start thinking in the short-term. There’s also a risk of not being able to sustain yourself if you incur any losses.

While Buffet can weather the storm any day at the stage he is currently in, when you’re starting in the investment sector, you have to spend as carefully and thoughtfully as possible—you never know when you’ll need it to survive trouble in the financial market.

His wisdom

He’s thinking about long-term results when investing.

A key element that plays a role in Warren Buffet’s success is his use of elementary probability. This method of making investments entails a certain way of handling your prospective investment possibilities. Buffet invests primarily in transparent, fairly consistent companies in their growth and have a methodological way of expanding and thriving, which he can get on board with.

This means that he invests in relatively lower price-to-earnings ratios but has extensive cash flow and consistent and sustainable earnings. He’s meticulous about selectively choosing to invest in sectors where he knows there will be stable, continuous growth.

Thinking in the long-term means having the patience and perseverance to wait for your decisions to be fruitful. Knowing that a smart investor will be willing to wait years to see their efforts pay off means that you have to be willing to withstand criticism, play by your own rules, and believe in the wisdom of your decisions.

“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.” Warren Buffet

He has a philosophy that he always follows.

For someone to be as successful as Buffet, they need a guiding philosophy that has proved to work through every situation. Warren Buffet abides by his philosophy to invest in companies that display durability.

This means that he invests in a company that has a competitive upper hand over its competitors because it brings in excess returns.

This excess is a “moat” that ensures companies in the industry can’t reach the point of taking away from their

profits. The moat is a type of protection that makes a company more reliable. Of course, to reach these conclusions, he puts in intense research, market analysis, and observations about both a company’s past and future performance.

Final thoughts

So, how does Warren Buffet have more money than you? It wasn’t a moment of luck that landed him where he now is. It took years of investments, planning, thinking, and making smart decisions that helped him become the billionaire we know of. With the right ideology, it’s possible to implement his philosophy to have a more successful startup and make wiser investments.

"One can best prepare themselves for the economic future by investing in your own education. If you study hard and learn at a young age, you will be in the best circumstances to secure your future."Warren Buffet