Warren Buffett’s Advice for Anyone Over 50
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Billionaire investor Warren Buffett has shared valuable investing advice over many decades. His philosophy focuses on buying great companies and holding them for the long term.
Buffett's advice can become even more valuable if you’re trying to protect your nest egg as you get closer to retirement. Here are some highlights from the legendary investor.
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Invest in yourself
You can grow your net worth by investing in the stock market, but one of the most important investments is in yourself. Learning new skills can lead to a higher income, which allows you to earn more.
And taking care of your mind and body can make you more energetic and productive in the workplace, and help you avoid some of the high costs of health care.
Keep it simple
Buffett isn’t a fan of complexity; he says to keep your investment strategy simple. Instead of picking stocks and staying on top of the latest news, Buffett encourages most investors to buy low-cost S&P 500 index funds.
These funds give investors exposure to 500 of the largest U.S. companies. When a stock underperforms (or no longer meets the index’s criteria) it gets removed from the index in favor of another company. It gets harder to recover from significant losses in the market as you get older, which makes index funds even more valuable for older investors looking for diversification.
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Stay calm
One of Warren Buffett's most famous quotes is, “Be fearful when others are greedy, and greedy when others are fearful.” Investors who panic during market downturns often end up selling their shares to patient investors who enjoy the ride to record highs.
Any investor can benefit from ignoring the news cycle and focusing on the long term. But doing so can be even more important for people who are approaching retirement, since they won’t have as much time for their portfolio to recover from downturns.
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Use the moat principle
Buffett looks for companies that have what he calls “moats”: competitive advantages that make it more difficult for other companies to keep up. You can develop a moat around your personal finances as well to make retirement more feasible when the time arrives.
High-interest debt can be a moat killer for people who are setting their sights on retirement. Paying off this debt, cutting expenses and investing more of your money will build your financial moat.
Become a long-term thinker
One of the key factors to Buffett’s success is his long-term thinking. Buffett focused on where stock prices would be in a few years instead of where they are today. He implemented strong financial habits and ignored short-term noise that made other investors panic.
Patience, simplicity and discipline define Buffett’s investing approach.