Whether you are figuring out how to invest for long-term financial goals or are seeking beginner advice on the stock market, getting rich isn’t usually a one-step process. Before you make any money moves, it’s a good idea to see what other successful people have done.
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There is some advice that stands the test of time, and that is certainly what we can glean from one of the most prolific investors in history — Warren Buffett. The “Oracle of Omaha” has imparted a lot of wisdom over the years regarding money and, well, life in general. Here is a deep dive into some of his best advice when it comes to building wealth and achieving financial success.
Start Investing Young
It’s never too early to start investing and, according to Buffett, the nature of compound interest is that it behaves like a snowball. The trick is to have a very long hill — which means either starting very young or living to be very old. “If I were getting out of school today and had $10,000 to invest, I’d start by going right through companies,” he said when it came to researching where to invest.
He recommended focusing on smaller companies that would be working with smaller sums and would likely have more of a chance that something would be overlooked. “You have to buy businesses,” he urged, “or little pieces of businesses called stocks. And you buy them at attractive prices and buy into good businesses.”
He claimed this advice will always be the same, even 100 years from now.
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Be Ready When Opportunity Comes
“The biggest mistakes are the ones that actually don’t show up. They’re mistakes of omission, not commission,” Buffett explained.
In his own life, he noted that he never lost a great deal of money on any one investment. “But it’s the things that I knew enough to do that I didn’t do. We have missed profits of as much as $10 billion that I knew enough to do that I didn’t do.”
He calls these missed opportunities: “There have been other investments where I did know enough to make that decision, and for one reason or another, I didn’t do it or I did it on a small scale.”
Learn the ‘Language of Business’
“If you’re interested in business, I definitely think you ought to learn all the accounting you can by the time you’re in your early 20s,” said Buffett, noting that accounting is the language of business, and you have to know the limitations of that language, as well as all other aspects of it.
He also advises that people work in several businesses. “There’s nothing like seeing how a business operates to build your judgment in the future,” he expressed, saying it’s important to understand what kinds of things are very competitive and what things are less competitive.
If you’re interested in investments, Buffett recommends doing a lot of reading. “I would talk business with people who are in business and find out what they think makes their operation tick or any problems and why. I just think you just kind of sop up every place you can.”
Focus on Overlooked Opportunities
“If I were working with a small amount of money, the universe would be huge compared to the universe of possible ideas I work with now,” said Buffett.
He shared his own experience working with a tiny amount of money, saying he would pore through volumes of businesses and would find two he could put $10,000 or $15,000 into. “They were ridiculously cheap. And obviously as the money increased, the universe of possible ideas started shrinking dramatically.”
Buffett continued, “I think if you’re working with a small amount of money … you can make very significant sums. But as soon as you start getting the money into the millions, the curb on expectable results falls off just dramatically.”
In other words, the more money you make, the harder it is to achieve high returns. “You’ve got a lot of competition to look at,” he said.
Surround Yourself With Great People
It’s very important to surround yourself with people who are better than you are, Buffett says. “You are going to move in the direction of the people you associate with.”
The billionaire says he’s been enormously lucky in that respect. “I’ve just had teachers and friends, and a spouse that really was a better person than I was. And I had enough sense to learn from these people that ‘life went better if you behave better yourself,'” he explained.
“I advise you to seek out as your partner in business, your partner in life — whatever it may be — look for the people that actually are examples to you [rather] than somebody you think you need to straighten out yourself.”
He says simple rules like that — delighting customers, working for other people, associating with people that will cause you to move in a better path than you might otherwise have — “they will take you so far in life that it’s hard to believe.”
Do What You Love and the Money Will Come
“There’s nothing like following your passion,” said Buffett. “I love what I do, obviously, and I’ve loved it the whole time I’ve done it.” He added that some people are very lucky to find their passion early.
“So if you find something that turns you on, my guess is you’re going to do very well,” he continued. “And the beauty of it is, in a sense, there isn’t that much competition. There are not a lot of people out there that are going to be running faster than you in the race that you elect to get into. If you haven’t found it yet, you have to keep looking.”
Caitlyn Moorhead contributed to the reporting for this article.
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This article originally appeared on GOBankingRates.com: Warren Buffett: 6 Tips on How To Get Rich
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