1. Reinvest your profits
Buffett recommends that if you make money on an investment, you should not take the profit and run, but rather reinvest it. He did the same as a teenager when, together with a friend, they invested in pinball machines. By reinvesting profits and not spending them on whims, they managed to acquire eight machines.
2. Avoid unnecessary debts
Many people who start personal and business projects are hampered by the loans they take out. Buffett's advice is to avoid unnecessary loans and credit cards, since, in his own words, "he has seen many people fail because of liquor and debt." If you need financing, opt for fixed terms and low interest rates. And always in moderation, since loans can be addictive.
3. Try to live austerely
Living simply, minimizing expenses, will create more opportunities to save, invest and profit. Buffett is a wealthy man, but he lives in the same downtown Omaha home he bought in 1958 for $31,500.
4. Never invest in something you don't understand
Avoid investments you don't understand and opt for those in which you are clear about the business generation model. To invest in something, it is not enough to expect that it can generate a good return, as was the case in the past with technology companies. As investors, we must have our own criteria and this involves knowing what the business is and how it works.
5. Always invest for the long term: Someone sits today in the shade of a tree that he planted a long time ago
Warren Buffett once said that “if you are not prepared to see your investment fall by 50% without panicking, don’t invest in the stock market.” Long investment horizons help to offset the volatility of shorter time frames and ensure better results.
6. When it comes to investing, pessimism is your friend and euphoria is your enemy
This recommendation contains a message of caution. It is better to have a pessimistic bias of prudence than to be carried away by emotions and incur losses.
7. “It is not possible to do good business with a bad person”
Buffett recommends surrounding yourself with successful people. “Choose associates whose behavior is better than yours and you will drift in that direction.”
