Over the years many of the world’s best-known investors have offered nuggets of wisdom in a bid to try and help individuals become smarter investors. We look at some of their quotes and what we can learn from them.
The playwright and poet Oscar Wilde once quipped: “When I was young I thought that money was the most important thing in life; now that I am old I know that it is.”
No doubt many who have perhaps neglected to save or invest adequately throughout their life will probably relate to such a sentiment. But what is the key to becoming a successful investor? The basic theory when it comes to stock markets is of course, to try to buy-low, and sell-high. However taking the decision to snap-up shares when markets are suffering significant periods of uncertainty, like the volatility shares endured when it was announced that the UK had voted to leave the European Union, is not an easy undertaking. But many experts will argue that such periods can potentially present some unique investment opportunities.
Here are some of their quotes that could potentially help guide you on your investment journey.
Always remember that the value of investments can fall as well as rise and you could get back less than you invest. If you’re not sure about investing, seek independent advice.
1. Warren Buffett
“I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful.” Warren Buffett
The world’s most famous investor and boss of Berkshire Hathaway, Warren Buffett is renowned for delivering strong long-term returns. According to the so-called ‘Sage of Omaha’, much of this success has been down to not following the herd when it comes to making investment decisions. As such if markets are rocketing, you may want to think about banking some profits but equally it’s vital not to automatically rush to cash in your investments if shares take a downturn. If you do, you could risk not only crystallising your losses, but you could potentially miss out on valuable investment opportunities.
2. John Bogle
“If you have trouble imagining a 20% loss in the stock market, you shouldn’t be in stocks.” John Bogle
John Bogle, the founder and former CEO of US investment firm The Vanguard Group, believes that investors need to be prepared for the ups and downs that come with the territory of investing. At times the stock market can be like a rollercoaster, but the hope is that if you can stomach this volatility, your investments may rise over the long-term, although of course there are no guarantees and you could get back less than you put in. If you cannot afford to lose money, and being invested is causing you sleepless nights, then investing is probably not for you and you are may be more comfortable sticking with cash savings accounts.
3. Paul Samuelson
“Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas.” Paul Samuelson
When it comes to long-term investing, Paul Samuelson, the late US economist and Nobel Prize winner succinctly illustrates his own approach, which is never to treat investing like gambling, as taking short-term bets is highly unlikely to pay-off in the long, or even short-term. Generally it is recommended that individuals invest sensibly and regularly – and ultimately play the long game – as investing should be about ‘time in the market, not timing the market’. You should therefore only considering investing over a minimum time frame of five years but preferably much longer, as this way you give your money the time and space to grow. Investing over the long term will also reduce the risk that you might be forced to sell when prices are low, and boost your chances of benefiting from the tendency for share prices to increase over time.
4. Robert G. Allen
“How many millionaires do you know who have become wealthy by investing in savings accounts? I rest my case.” Robert G. Allen
Investing means taking on risk as the value of investments can fall as well as rise and you could get back less than you invest. But US politician and businessman Robert G. Allen believed this was a risk worth taking. While it is highly recommended that all investors have a cash savings buffer, in a low interest rate environment, you are unlikely to earn a great deal from having your cash on deposit, particularly following the Bank of England’s decision to cut the base rate to a record low of 0.25%. Some people are ‘risk- averse’ meaning they’d rather put their money into safer investments, even if that means less chance of making big returns. Others are comfortable accepting a greater level of risk for the chance of higher potential rewards.
5. Robert Kiyosaki
“It’s not how much money you make, but how much money you keep, how hard it works for you and how many generations you keep it for.” Robert Kiyosaki
Being able to pass down wealth to loved ones is a lifetime goal for many people. But as American businessman and investor Robert Toru Kiyosaki explains above, making money in the stockmarket is just half the battle – the real challenge is being able to keep and protect it, while allowing it to continue to grow. This means always maintaining a clear investment strategy and ensuring on a regular basis that your portfolio is suitably diversified. Remember that all investments carry risk and there’s always the possibility that you could lose money or get back less than you invest.
6. Peter Lynch
“Know what you own and know why you own it.” Peter Lynch
Here US investment guru Peter Lynch cuts right to one of the core principles of investing – never invest in something you don’t understand. While you may often hear market speculators talk up some hot new prospect, be very wary of such hearsay if you do not understand a business, what it does and indeed what its prospects are. Always understand what you are investing in, because to paraphrase Warren Buffet, risk fundamentally comes on the back of not knowing what you are doing.
Please bear in mind that this article is for general information purposes only. If you are not sure which investments to choose or how to manage your investments, seek professional independent advice.
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