Billionaire investor Warren Buffett has shared valuable investment advice over the decades. His philosophy focuses on buying great companies and holding them for the long term.
Buffett’s advice can be even more important if you’re trying to protect your nest egg as you approach retirement. Here are some quotes from a famous investor.
Invest in yourself
You can increase your worth by investing in the stock market, but one of the most valuable investments is in you. Learning new skills can lead to higher income, allowing you to earn more.
And taking care of your mind and body can make you stronger and more productive at work, and help you avoid some of the higher health care costs.
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Keep it simple
Buffett is not a fan of complexities; he says keep your investment strategy simple. Instead of picking stocks and staying on top of the latest news, Buffett encourages many investors to buy cheap S&P 500 index funds.
These funds give investors exposure to the largest 500 US companies. If a stock underperforms (or no longer meets index criteria) it is removed from the index in favor of another company. It becomes harder to recover from big losses in the market as you get older, which makes index funds even more important for older investors looking for diversification.
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Stay calm
One of Warren Buffett’s most famous quotes is, “Be fearful when others are greedy, and greedy when others are fearful. Investors who panic during market downturns often end up selling their stocks to patient investors who enjoy riding to record highs.”
Any investor can benefit from ignoring the news cycle and focusing on the long term. But doing so can be even more important for people nearing retirement, since they won’t have much time for their portfolios to recover from a downturn.
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Use the moat principle
Buffett looks for companies that have what he calls “moats”: competitive advantages that make it difficult for other companies to keep up. You can build a moat around your personal finances and make retirement possible when the time comes.
High-interest debt can be a killer for people looking to retire. Paying off this debt, reducing expenses and investing your extra money will build your financial system.
Become a long-term thinker
One of the key factors in Buffett’s success is his long-term thinking. Buffett focuses on where stock prices will be in a few years instead of where they are today. He practiced strict financial practices and ignored the short-term noise that scared other investors.
Patience, simplicity and discipline define Buffett’s approach to investing.
