Who better to learn to get rich investing than the world’s richest investor? Warren Buffet has built up assets of $46 billion only by investing. What we also like to advice you is to do good research into the parties you want to invest with. There are countless different online brokers that want to help you invest, but beware, not all of them offer the service you are looking for. If you are active in Spain, read this page about el mejores brokers Espana en 2021 to get a clear picture of all the options.
Investering in stocks with a return of 586.817%
Since 1965, he has achieved an average annual return on his investments of 19.7%, against a return of 9.4% of the S&P 500 index. This difference may not seem that big, but due to the interest-on-interest effect, the difference in total return is enormous; 586.817% compared to 7.433%. So if you had had $10,000 invested by Warren Buffet in 1965, it would have been worth over $58 million by the end of 2012. Whereas if you had followed the S&P 500 index you would ‘only’ have built up $0.7 million. So you don’t have to start with a large amount of capital to get rich investing.
During his career he has changed his investment style several times, but he has a preference for companies with so-called consumer monopolies. He earned a large part of his money by investing in Coca Cola, Gillette and American Express. This does not mean that he invests in every company with a consumer monopoly, because the price you pay determines the return. He knows which companies he would like to own and then waits until they are available for the right price. Then he buys large packages and preferably whole companies. He then places them in his investment vehicle Berkshire Hathaway. Berkshire owns dozens of companies and has four major investments: American Express, Coca-Cola, IBM and Wells Fargo.
Warren only invests in simple companies he understands. For example, he missed the whole dot com bubble at the end of the nineties and it was then thought that his approach had been worked out. Nothing could be further from the truth.
Tip is to never invest in companies you don’t understand
In the seventies, for example, he made a lot of money from media companies because he saw that regional newspapers had monopolies on the regional advertising market, something like Google now has on the internet. These companies were undervalued at the time, from which he benefited. Also, if you are willing to start investering a lot of money, and you are active in Europe then you need to clearly look for a trustworthy party to work with. One of the best options is to check this important question for french speaking investors. Quels sont les coûts des courtiers en France?
- Furthermore, he assumes that past performance does give an indication for the future. So companies that are profitable and where earnings per share is growing steadily are his preference. He also looks for companies with a good return on equity and little or no debt. Finally, he looks at the quality of management. A reliable management with an understanding of the business.
- When he invests, he steps in with the aim of keeping investments for a very long time. He therefore spends a lot of time in advance in getting to know a company well. He learns everything about the sector and the company, reads annual reports and speaks to management.