Warren Buffett: Four lessons from the legend that can help you sail through any crisis3 min read . Updated: 30 Jun 2020, 10:31 AM IST
The wisdom Buffett shares are timeless and profound, and lessons are not bracketed for investors only
Warren Buffett, the octogenarian billionaire investor, is a friend we all need in the time of crisis. The business tycoon does not only pick the right companies but also faithfully delivers the sagacious life gospels. Millions take notes when he shares his wisdom on any topic. Buffett also practices what he preach, and that comes from the fact that even at the age of 89, he actively participated in Berkshire's four-hour-long virtual AGM in May.
The wisdom Buffett shares are timeless and profound, and lessons are not bracketed for investors only:
Cash Is Always King
Warren Buffett's Berkshire Hathaway had a record $137 billion in cash at the end of March. "We really want to be prepared for anything," Buffett said. "We never want to be dependent, not only on the kindness of strangers, but the kindness of friends."
This Warren Buffett principle for the cash reserves should be a lesson for all of us to weather emergencies. The cash at the end is the only thing which can help you wither away the uncertainties future may behold.
"Having loads of liquidity ... lets us sleep well," he said in his 2009 shareholder letter. Master the art of limiting your cerebral misadventurism, don't buy things you don't really need. Learn from Buffett that even if he sitting on hundreds of billions of cash pile, he would rather wait for a quality company which suits his portfolio, then dump his money on some junk.
Discretionary expenses are good for the gross domestic product of a country, but is indeed counterproductive for an individual. Buffett still lives in the same home he bought in 1958 and never spends more than $3.17 on breakfast. Be like Buffett.
Stick to your long term plans
“Someone's sitting in the shade today because someone planted a tree a long time ago." This is for people are get totally engrossed in the present problems. Our obsession with the volatility and uncertainties in the short term somehow undermines the remedial nature of the long term.
“Nobody buys a farm based on whether they think it’s going to rain next year," he said in a television interview. “They buy it because they think it’s a good investment over 10 or 20 years."
Your current actions should also have a long lasting impact, even if it is doing well for now. As Buffett says, "decide a business is worth investing in because it will last, not because it’s doing well right now."
Invest in yourself
This advice gains significance from the fact that it helped Buffett climb the success ladder. When he was younger, Buffett was so terrified of public speaking that he enlisted in a Dale Carnegie course to overcome his fear.
“One easy way to become worth 50 percent more than you are now at least is to hone your communication skills — both written and verbal," Buffett said during a 45-second car interview in 2019.
Buffett credits part of his success mantra to the investment he had made in himself, "by far the best investment you can make is in yourself."
Credit cards debt:
The 'oracle' Warren Buffett has advised people to avoid using credit cards as a piggy bank. At AGM 2020, talking about the excessively high interest rates on credit card dues, Buffett says, “I don’t know how to make 18%. If I owe money with 18% interest, the first thing I would do with any money I have is to pay it (credit card due). It’s gonna be way better than any investment idea I have got," he said.
“You can’t go through life, borrowing money at those rates and be better off. So, I encourage everybody and it's contrary to Berkshire's interest in certain cases and in the world with love in the credit cards... I would suggest to anybody that the first thing they do in life is that they can get something else later on, but don’t be paying even 12% to anybody just pay that off…," said Buffett.
In India, the interest on credit cards can go up to 36%. The advice against carrying forward your credit card debt is coming from one of the wealthiest person on the planet, and too, against his own interests.