“Fear is not real. It is a product of thoughts you create. Do not misunderstand me. Danger is very real. But fear is a choice.” -Will Smith
We fear investing our money. Growing up, we always hear people tell us to save and invest, but how many people are really investing? Is it because we are afraid or because we don’t know how or what to invest in? Maybe it’s a little bit of both. I finally mustered up the courage to start investing in the stock market. Thankfully, I had the help of my cousin to get me started, and to help me figure out what exactly I wanted to invest in. Everyone knows that Warren Buffet is one of the world’s most successful investors, so today I decided to share some tips from an article entitled “Warren Buffet’s Certain Advice for Uncertain Times” (Bottom Line newsletter):
· Realize that the market always comes back. Over the short-term, economic and political events may cause the market to go down. But over the long-term, the American economy is strong and resilient, which causes stocks to go up.
· Bad news is an investor’s best friend. The best time to buy is when times are tough and other investors are scared. For example, bad news allowed Buffet to get great deals on shares of wonderful companies like American Express and Coca-Cola. In September of 2008, Buffet was able to buy General Electric at nearly half the price it was sold for a few months earlier.
· Buy great businesses. Buffet doesn’t think of himself as owning pieces of paper whose prices go up and down; he thinks of himself as a business owner. And as such, he only buys shares in well-run-businesses with growing sales and unique competitive advantage.
· Only invest in what you understand.
· Always have a margin of safety in case something goes wrong. Buy shares for considerably less than they’re worth, avoid going into debt and diversify your investments.
· Decide on your investing values and criteria, and stick to them no matter what. When investors get in trouble, it’s usually because fear or greed has made them ignore their own rules.
One of my favorite tips that Buffet offered was to buy great businesses. It’s very important to do research on each company you plan to invest in. Yahoo Finance does a great job getting information on companies. Here you can find out the company’s history, competitors, share price, major holders, key statistics and so much more. In order to get started you need to open a brokerage account. There are many stock trading accounts available. The link below offers a list of brokerage accounts. Hope this helps!