Principles of Long Term Investment Success (2024)

FAQs

What are the 5 golden rules of investing? ›

It's about perseverance – holding firm rather than panic-selling or withdrawing your funds, and giving them time to grow instead. Take this report by J.P Morgan, for example. It shows that if you missed the best 10 days in the market between 1999-2018, your return would be cut in half.

"Rule No. 1: Never lose money. Rule No. 2: Never forget Rule No. 1."- Warren Buffet.

A: Five rules drawn from Warren Buffett's wisdom for potentially building wealth include investing for the long term, staying informed, maintaining a competitive advantage, focusing on quality, and managing risk.

Key Takeaways

Building wealth over time requires an understanding of how to invest wisely, safeguard assets, and manage debt.

Buffett follows the Benjamin Graham school of value investing which looks for securities with prices that are unjustifiably low based on their intrinsic worth. Buffett looks at companies as a whole rather than focusing on the supply-and-demand intricacies of the stock market.

Generally, any asset you hold for over five years is considered a long-term investment and you usually distribute your money across a range of assets to build a diversified investment portfolio.

Investing can be overwhelming, but with the guidance of three fundamental pillars, you can move forward with confidence. These foundational pillars are Faith in the Future, Patience in the Presence, and Discipline in Your Decisions. Let's dig deeper into each one.

What are the four pillars of value investing? ›

In summary, The Four Pillars of Investing is an important tool for investors looking to design a more successful investment portfolio. Investors can make better financial decisions by comprehending the four pillars of theory, history, psychology, and business.

Popular investment philosophies include value investing, focusing on shares that the investor believes are fundamentally underpriced; growth investing, which targets companies that are in a growth or expansion phase; and investing in securities that provide a return in interest income.

Paying off a house, saving for retirement, and ensuring that you have enough money to pay for your child's college education are among some of the most common long-term investing goals.

1 – Never lose money. Let's kick it off with some timeless advice from legendary investor Warren Buffett, who said “Rule No. 1 is never lose money.

Remember this: a company's stock price doesn't determine it's valuation. The key to successful investing is purchasing companies way below their actual value - then capitalizing when the market realizes the mistake.

It is a simple rule that answers the following questions. What will be my thoughts 10 minutes later about the decisions that I make now? What will they be ten months later? And what will they be ten years later?