Warren Buffett’s three key investing mantras for millennials

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Highlights

  • Millennials are widely considered as the major growth engines driving stock market, investment funds and economy.
  • Patience is an important virtue for millennials to go far in their lives.
  • Thus, it is critical for investors to learn right investing strategies.

The word millennial is used to describe the generation born from 1981 to 1996. This is the set of people who are relatively high-risk takers. Along with Generation Z, millennials are widely considered as the major growth engines for stock market, investment funds and economy.

Since youngsters take more risks in their lives, they are also prone to committing more mistakes – both in their personal and financial lives. Patience is an important virtue for millennials as they have several decades ahead of their retirement. Thus, it is critical to learn right investing strategies. And, who better than the legendary investor, Warren Buffett, to turn to for investing mantras.

Since Buffett’s strategies have proved successful for shareholders of Berkshire Hathaway, he can impart a treasure of useful tips to millennials. Here, we discuss a handful of such tips which can help investors a great deal.

Hold for a long-term

Popularly nicknamed as the Oracle of Omaha, Buffett always talks about holding investments for a long time. According to him, patience has helped in boosting the returns from his portfolios. “Our favourite holding period is forever”, Buffett had once famously said. And he continues to live by that motto.

In fact, compounding has been historically seen to have a big role in long-term investment as one gets the benefit of return on return compounded in one's corpus.

Buffett began building positions in American Express, Coca-Cola and Wells Fargo (which are some of his largest holdings currently) way back in 1991, 1988 and 1989, respectively.

Only invest in something you can understand

Buffett advises to only invest in assets which one can fully understand. There is no point parking your hard-earned money in investments which are beyond your understanding.

Newbie investors often invest in particular stocks just on the basis of their friends’ advice and it is a common practice in stock market. It can easily burn your fingers. It would be better to get familiarised with the fundamentals of that particular investment before taking a plunge.

You should always be ready to say ‘no’ to the businesses that are beyond your understanding since it is better not to foray into uncharted waters that may lead to regret later.

Discipline matters more than intellect

“You don’t have to be smarter than the rest. You have to be more disciplined than the rest,” says Buffett. For him, discipline and temperament pay more than sheer intellect. A person with high intellect and minimal discipline cannot survive in the long run. 

According to Buffett, decisions based on objective facts and devoid of emotions give good results in the long term.

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