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Top 10 Simple Rules in Warren Buffett\'s Investment Philosophy

The legendary investment house Warren Buffett's fortune may be worth tens of billions of dollars, but he still lives a simply life.  His smart investment philosophy and wealth accumulation strategies are also not too complex and can be sustained even during these difficult times.

However, if it was too easy, you would wonder, why haven\'t so many people become as rich as Mr. Buffett?  The reason is that his investment philosophy requires discipline, patience and instincts that many people either don\'t have or don\'t want to develop.

Below are 10 rules of investment philosophy that helped the legendary investment house Mr. Buffett find and achieve success.

10 simple rules in Warren Buffett\'s investment philosophy

Simple living is one of Warren Buffett\'s investment philosophy

1. It all starts with good communication

(Warren Buffett's investment philosophy)  

The first key to Mr Buffett\'s prosperity has little to do with stock options.  According to him, you need to become a powerful communicator: Use your word as your most important tool.

 "Without good communication skills, you won\'t be able to convince people to follow you even if you see the mountain and they don\'t" Buffett once told an MBA student at Stanford.

While this may sound like sage advice for financial planners, it\'s great for helping anyone develop leadership success skills and thinking ability in stressful situations.

2. Looking to the future, not to the past

(Warren Buffett's investment philosophy)  

 Mr. Buffett made a famous statement in the 1950s that today\'s investment house are not making a profit from yesterday\'s growth.  This maxim remains true to this day.

 According to Buffett, following trends in the past is less important than identifying new opportunities.  When deciding whether to invest in a company or not, focus on its future, not its past.

Don\'t get stuck in the past when it comes to mortgage.  No matter how long you\'ve held on to your existing home loan, consider refinancing to take advantage of the lowest mortgage interest ever available.

3. When investing, let's innovate, don't follow

(Warren Buffett's investment philosophy)  

Buffett believes adopting crowd psychology is a surefire way to get mid-range results.  "You need to separate your mind from the crowd" he said.

 It\'s difficult, but you have to get out of there by developing your own investment process based on your own knowledge and experience.

 At the same time, be open to helpful advice.  Financial planning services - now cheaper and available online - can help you achieve your dream retirement.

4. Simple living 

(Warren Buffett's investment philosophy)  

Mr. Buffett is known for being a simple person.  According to CNBC, he drives a modest, old car.  He still lives in his home in Omaha, Nebraska, for $31,500 in 1958, and he eats breakfast almost every day at a McDonald\'s.

 You can follow his example by finding new directions for your money.

5. Always ready to learn new things

(Warren Buffett's investment philosophy)  

Mr. Buffett likes to say that accumulating knowledge is like interest in the bank.  He started each day with a newspaper, and read books on different topics every day.

 Information absorption not only impacts your investment process, but also recipe for success in all areas of your life.  Immerse yourself in what others can tell you about new technologies and new strategies.

People who don\'t learn new things run the risk of becoming obsolete.

6. Know when to stop

(Warren Buffett's investment philosophy)  

The legendary investment house of Buffett must also sell stocks when needed.  Despite his great success, he has bet on a lot of bad stocks.  The secret to achieve success for a long-term investment process is knowing when to quit.

Mr. Buffett learned these lessons from betting in early horse races.  He tried to cover losses by increasing his stakes, and lost more money.

 Be aware of when a stock actually falls in value so you can ignore it and minimize your losses.  If you use automated investment process or robotics consulting, your portfolio will be automatically adjusted to protect you when stocks crash.

7. Long-term thinking 

(Warren Buffett's investment philosophy)  

"Buy and hold" is a popular long-term investment process that calls for sticking to a stock even if it has a bad day - or month.

 Mr. Buffett\'s approach can be called "buy and hold and hold".  Like he wanted to tell Berkshire Hathaway shareholders that "the right time to hold us is forever."

 He doesn\'t mind when the stock falls in price from time to time, as those are good opportunities to buy more stocks at lower prices.

8. Never invest with borrowed money

(Warren Buffett's investment philosophy)  

When investing, use your own money.  Buffett said borrowing is crazy.  "You are crazy risking what you have and need for things you don\'t really need" he said.

If you borrow to invest, your investment process will be very tied to your repayment needs.  Some investments require long-term planning and maintaining growth, which is difficult with a debt hanging overhead.

You don\'t need a lot of money for investment process if you use a popular stock exchange app that allows you to buy small portions of stock for as little as $1.  Plus, you never have to pay any commission.

9. Dividends are key to long-term growth

(Warren Buffett's investment philosophy)  

Mr. Buffett likes stocks that pay dividends.  His company, Berkshire Hathaway, receives hundreds of millions of dollars each year from Coca-Cola in the form of dividends.

Dividends from trustworthy companies that consistently meet or exceed their goals.  Their stock may not make you a lot of money quickly, but it can put your investment process in automatic mode.

Other high-paying companies include Caterpillar, AT&T, Verizon and the investment firm BlackRock Capital - however, not Berkshire Hathaway.

10. Remember that anything is possible

(Warren Buffett's investment philosophy)  

Mr Buffett is known for painting walls with what he calls "the art of instruction" which includes front pages of newspapers with screaming headlines about the stock market crash.

 They reminded him that in investment process and in life, you need to be ready for anything that can happen.  If you keep this in mind, then you will proceed with caution and make an informed decision about your investments.

 You will avoid debts you cannot handle, live an unsustainable lavish lifestyle, and be able to cope with market volatility - like legendary investment house Warren Buffett.

Top 10 Simple Rules in Warren Buffett\'s Investment Philosophy

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