Mr. Warren Buffet is one of the greatest investors that the world has ever seen. He has been investing since the age of 14 years and as per 34th Annual Forbes List Of The World’s Billionaires issued in 2020, he is the 4th richest person in the world with the net worth of $67. 5 billion.

If you want to really grow your wealth, you must adhere to the following investing principles we can learn from Warren buffet.

1. Live Within Your Means:

Never spend more than you earn. Many people fall into the depths of poverty because they lead an extravagant life and spend all their money. You must learn to control your expenses and live in a frugal way if you want to build your wealth.

2. Invest In Businesses You Understand:

Invest only in companies whose businesses you understand well. This will help you to evaluate these companies properly before investing. Also, when the markets fall, you will have to keep an eye on their business position and decide whether to hold on to those shares or not. If you do not understand their business, you will not be able to take the right decisions at the right time.

3. Avoid Too Much Diversification:

If you buy too many shares to diversify your portfolio, you will have difficulty in managing them. Tracking all the shares at a time when markets become volatile will be impossible, and while you track some of the shares, the others may run into losses. Hence buy only a few shares at a time, so that you can manage them properly.

4. Safety First Investment Second:

Warren Buffet believes that you can make money only when you do not lose any. One of the most well-known set of rules laid down by him in this regard are:

Rule #1: Never lose money

Rule #2: Never forget Rule #1

Hence, while making any investment decision, you will first have to see whether your fund will remain safe or not and then go for the investment.

5. Do not Watch The Market Closely:

After you buy your shares do not look at the markets throughout the day. This will result in wastage of time and you may start to panic due to small movements in the market. It is far better to spend more time in doing your research before investing and after buying the shares track their prices only occasionally.

6. Focus on the long term:

If you want to build real wealth, you must invest for the long term. Buy shares of companies you think will do well over the coming years and wait patiently. Do not get worried by small movements in the markets and let your money grow over the long term.

We are sure that you can invest responsibly and profitably if you adhere these 6 principles laid down by Warren buffet. The key to growing money is to be disciplined and by following these rules you will become a much better investor.

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