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5 Investment Learnings from Warren Buffet

By Finserv MARKETS - Sep 4,2019
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Investment Tips From Warren Buffet

Warren Buffett is not only the most successful investor of all time but also a teacher of investing. He has a net worth of US$ 82 billion as in July, 2019, making him the third-richest person in the world. Buffett has shared his wisdom about investment in his annual reports and various articles, including his annual letters to shareholders. Known as the ‘Oracle of Omaha’, Buffett runs Berkshire Hathaway, which owns more than 60 companies. Did you know that Buffett bought stock at the age of 11 and first filed taxes at the age of 13? Buffett is also a philanthropist, who has promised to give away 99% of his fortune. In 2019, he donated US$3.6 billion.

Investment instruments and the manner of investing for achieving high returns have evolved over the years, depending on economic factors, market conditions, and people’s preferences. In India, Unit Linked Insurance Plans  are emerging as the new instrument of choice owing to their ability to act both as an insurance cover and an investment plan.

Here is a list of five investment lessons from Warren Buffett:

1. Investing is serious business:

Buffett always said that everyone should be an investor, and people should choose their own investments. But the investment cannot be taken casually. It requires painstaking study to master the requisite skills, and then a skillful use of the acquired skills to find worthy investments. By the time Buffett was 11, he had read scores of books on investing, many of them several times, before making his first investment. This means that you should not only make a thorough study of the market before investing but also invest in viable instruments like a ULIP investment plan. The arrival of unit linked insurance plans have blurred the boundaries between investment and insurance products, gaining widespread acceptance.

2. Invest in what you understand:

Buffett always underlined that people should have a circle of competence. This circle would include your defined industry, business model, asset class, investment style and other areas of competence. You should, however, not remain stagnant, but keep on expanding your circle of competence. Buffett said that an investor needs to do only a few things correct as long as big mistakes are avoided. Staying within your circle of competence ensures that you make the right investments. A ULIP investment plan in India not only ensures that you are investing in what you understand but also provides for goal-based planning.

3. Plan for long-term investment:

Buffett often said that, if you are not willing to own a stock for 10 years, don’t even think about owning it for 10 minutes. Buffett was one of the first investors to advise a long-term perspective while investing. He said that an individual investor’s greatest advantage was patience, and only a patient investor could beat the market in the long run. Similar to his financial lesson, a ULIP plan is focused on long-term planning. The five year lock-in period ensures investor discipline, where they must make regular premium payments to keep the policy active, thus allowing for systematic creation of wealth for the desired financial goals.

4. Think like an owner:

Buffett often advised people to think like an owner of the company. He underlined that if you are about to invest in a company by buying its shares, you should first ask yourself if this is a business that you would have wanted to own. In India, ULIPs provides you the option of thinking and subsequently investing like an owner. Within the plan, you can move your investments from one fund to another. You can transfer units fully or partially between funds, which include equity, debt or a combination of both.

5. Invest unemotionally:

Buffett always told investors to avoid systematic errors in investing by avoiding emotions, egos, and inherent cognitive biases. He advised investors to admit mistakes, which would, in turn, allow them to let go of the losing investments. Rather than being over-optimistic, an investor had to find evidence from the market to support their choice of investment. In India, ULIPs are among the most pragmatic vehicles for investments, as evidenced by data from the market.

Conclusion: These financial lessons from Buffett can help you make the right investment. Consider looking at the ULIP Plans available on Finserv MARKETS. Enjoy dual benefits of flexibility in investments along with high ULIP returns. You can easily select from plans like Bajaj Allianz Future Gain and Bajaj Allianz Goal Assure. Not only do these funds enjoy excellent ratings, but they also provide high, tax-free returns.

To know more on ULIP investments in depth, you can check out these blogs:

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