How to Become a Millionaire by Investing – Warren Buffett’s 5 Investment Strategies

Stock investing is one of the fastest ways to become a millionaire. Warren Buffett is a good example of a billion dollar investor. To be a successful investor like Warren Buffett, you must first understand his market beliefs, investment strategies.

1. The market is irrational

Warren Buffett thinks the market is irrational. It is often due to greed and fear. Do you know people who go when the market goes up and sell when the market goes down? Or are you one of them? If you do your research աք understand the true value of the stock you buy, you will feel safe և you will not worry when prices go up and down.

2. No one can consistently predict the market

Remember for a moment you heard stories of someone spending money on mysterious trading systems hoping to make a good profit, but only to be disappointed? Average investors are trying to predict the next step of the market. When they can not predict, they give money to the so-called experts, who claim that they can. Warren Buffett thinks that successful investments have nothing to do with the ability to predict. Master investors know that no one can consistently predict the market.

3. Huge revenue with little risk

While many talk about “high risk, high returns,” Warren Buffett believes in huge, low-risk returns. In fact, Warren Buffett is a very risky investor. His first rule for investing is “Never lose money” and his second rule is “Never forget the first rule”. People consider investing a high risk because they have not learned how to do it right. Just like driving, do not you think that driving on the road is risky if you have not learned to drive properly? If you know the right way to do it, you can significantly reduce the risk.

4. Invest in a few big companies

Most investors are taught to “diversify, diversify, diversify.” Consequently, they bought many mutual funds and kept small shares in many shares. Warren Buffett believes that diversification is for people who do not know better. By investing in the whole market, you will go down with the market. The key to surpassing the market is to identify big companies and focus your investments on them.

5. Make decisions based on strict criteria

Many investors make emotional decisions. They are tempted when they learn hot tips or see their friends make quick profits. Then they sell immediately when they see a drop in stock prices the next day. Successful investors follow a set of strict criteria for deciding when to buy or sell. Investment criteria are the rules you follow to determine what stocks to buy, when to buy, after buying, and when to sell. Here are some examples. The company should have increasing sales ույթ profit over the last 5 years, return on equity should be more than 15%, long-term debt should be less than 3 times net profit, etc.