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World-renowned billionaires Warren Buffett and Bill Gates were once asked about their secret to success. The one word answer they both gave? Focus.
For Buffett and Gates, that focus started young. Gates was obsessed with coding as a teenager. That passion led him to co-found Microsoft and become the seventh wealthiest person on the planet, according to the Forbes real-time billionaires index.
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Buffett, meanwhile, has been investing since the ripe age of 11. He’s now known as one of the most successful investors of all time, ranking as the fifth wealthiest billionaire according to Forbes.
In an interview with CNBC, Buffett explained how his focus differed from Gates.
“While he was focused on software, I was focused on investments,” he said. “It gave me a big advantage to start very young — there’s no question about it.”
Even if you’re long past your teenage years, it’s not too late to get focused. Here are three ways to refine your investing strategy to emulate Buffett and Gates’s wealth-building success.
Start early and stay focused
The best time to start investing was yesterday. The second best time is now.
Even if you didn’t start investing when you wished you did, that’s all the more reason to start today. Compound interest is another reason to invest sooner rather than later.
Buffett once described earning compound interest — interest you earn based on your personal contributions and the interest you’ve already earned — as the ability to snowball your wealth.
You don’t need to wait until you have a large pile of money to set aside either. It’s possible to put your cash to work every single day by investing your spare change.
Acorns, an automated investing platform, can help you do that – without you even needing to think about it. By signing up and linking your bank account, Acorns automatically rounds up the price of your purchases to the nearest dollar and deposits the difference into a smart investment portfolio. That means Acorns is building your investments in the background while you earn compound interest.
Even better — you can get a $20 bonus investment when signing up with a recurring contribution.
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Remember, the more time you have to earn interest, the bigger the rewards you’ll see. Starting small today can pay dividends tomorrow.
Focus on quality and value
Buffett is famously a proponent of value investing, which involves buying stocks that are trading below their intrinsic value. He would look for companies with long-lasting earning potential, consistent earnings, good cash flow and a low amount of debt.
Value investing can apply outside of the stock market too. For instance, you can use this strategy to invest in real estate: buying undervalued properties to earn long-term returns. And new investing platforms are making it easier than ever to diversify your investments by tapping into the real estate market.
Homeshares gives accredited investors access to the $34.9 trillion U.S. home equity market, which has historically been the exclusive playground of institutional investors.
With a minimum investment of $25,000, investors can gain direct exposure to hundreds of owner-occupied homes in top U.S. cities through their U.S. Home Equity Fund — allowing you to invest directly into the untapped value of residential properties without the headache of buying, owning or managing them yourself.
With risk-adjusted target returns ranging from 14% to 17%, Homeshares can provide an effective, hands-off way to invest in owner-occupied residential properties across regional markets.
If you’re not an accredited investor, crowdfunding platforms like Arrived allow you to enter the real estate market for as little as $100. Arrived offers you access to shares of SEC-qualified investments in rental homes and vacation rentals, curated and vetted for their appreciation and income potential.
The platform makes it easy to fit these properties into your investment portfolio regardless of your income level. Their flexible investment amounts and simplified process can help you take advantage of an inflation-hedging asset class without any extra work on your part.
Arrived is even backed by another world-class investor, Jeff Bezos.
Focus on learning and improving
It’s likely you’ll see both gains and losses through the lifetime of your investment portfolio. The question to ask yourself is: How can I turn my investing blunders from the past into successes in the future?
Even investing greats like Buffett have made mistakes over time. At the 1997 Berkshire Hathaway annual shareholders meeting, he admitted to making “mistakes of omission” where he had the opportunity to invest in attractive businesses, but failed to act.
Not everyone has the investing knowledge to jump on those kinds of opportunities. To gain an advantage, you may want to consider working with a professional financial adviser who can translate investing into something you can better understand.
WiserAdvisor’s free and easy-to-use platform connects you with two to three experienced financial advisors in minutes.
With no fees to get started, you can browse your advisor matches with WiserAdvisor’s comparison tool and book a free consultation. All you need to do is enter some basic information like your postal code and what you’re hoping to achieve.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
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