This Is Warren Buffett's Best Advice for Success

Here are Buffett's top quotes on investment success.

Warren Buffett is one of most-respected investors of all time. Since taking over Berkshire Hathaway in 1965, he has delivered an average annual return to investors of over 20%. During the same time period, the S&P 500 returned 10.5%. 

To put this in perspective, $1 invested in the S&P 500 in 1964 would be worth $30,209 by the end of 2021, but $1 invested in Berkshire under Buffett would be worth over $3.64 million. This is 120 times more than the S&P. What is the key to Buffett's success? Here is some of the best advice he has given, as well as some memorable quotes.

Never lose money

"Rule No. 1: Never lose money; Rule No 2: don't forget rule No. 1."

The more money you lose or don't have now, the greater the impact on your ability to earn money in the future. Every dollar you lose or spend is a dollar you don't have to invest. This is the reason why Buffett drove an old Volkswagen Beetle even after making his millions.

Start early

"I made my first investment at age eleven. I was wasting my life until then." 

The secret to investing is starting early and getting your money to compound for you. Even if it isn't much, over the long term, time is more important than the return or amount invested.

Don't let emotions get in the way

"Investors should remember that excitement and expenses are their enemies. And if they insist on trying to time their participation in equities, they should try to be fearful when others are greedy and greedy only when others are fearful." 

Buffett's success is based on being disciplined, patient, and avoiding emotional investing. When his right-hand man, Charlie Munger, was asked at the annual meeting how to explain Berkshire Hathaway to a 13-year-old, he stated, "We always tried to stay sane when other people, a lot of them, go crazy. That's a competitive advantage." Good investors will not let emotions get in the way.

Think long term

"I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years." 

Buffett constantly emphasizes investing for the long term. You want to buy a company that will grow regardless of the stock price. Many investors purchase stocks based on historical performance. Buffett states that, "The investor of today does not profit from yesterday's growth." You want to purchase a stock for its potential growth, not the growth it already experienced.

Invest in yourself

"The best thing you can do is to be exceptionally good at something…So the best investment by far is anything that develops yourself."

Buffett has long been a proponent of increasing your human capital. Your human capital consists of things like your education, professional expertise, financial knowledge, and your health. During the 2008 financial crisis, Buffett stated that,  "the best thing to do is invest in yourself" by sharpening your skills and focus on being at the top of your field. 

Investors all over the world continue to refer back to Buffett's advice and quotes like these for inspiration and knowledge. And that's really saying something.