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After nearly seven decades of experience, investing legend Warren Buffett has accumulated more than $142 billion in personal wealth — and the Oracle of Omaha believes much of his success is based on his ability to avoid losing money.
Buffett has always advocated a long term investment approach — which is perhaps the reason why his strategies resonate with millions of people.
“You only have to do a very few things right in your life so long as you don’t do too many things wrong,” he once said.
With that in mind, here are 3 investment mistakes Buffett says you should avoid in order to secure your fortune for the long term.
1. Speculating instead of investing
Some investors fail to recognize the difference between a speculative asset and an investment-worthy asset. According to Buffett, the difference is in how the asset generates a return.
“All investment is laying out some money now to get more money back in the future,” Buffett once explained. “Now, there’s two ways of looking at getting the money back. One is from what the asset itself will produce. That’s investment. [The other] is from what somebody else will pay you for it later on, irrespective of what the asset produces. And I call that speculation.”
Buffett believes that assets that produce income organically — such as farmland, profitable companies, dividend stocks and real estate investment trusts — are investment-worthy.
If you want the kind of expert advice that Buffett surrounds himself with, you’ll need help choosing a financial advisor. With [Vanguard], you can connect with a personal advisor who can help assess your current financial situation and make sure you’ve got the right portfolio to meet your goals for the future.
Vanguard’s hybrid advisory system combines advice from professional advisors with automated portfolio management to make sure your investments are working to achieve your financial goals.
All you have to do is fill out a brief questionnaire about your financial goals, and Vanguard’s advisors will help you set a tailored plan, and stick to it.
2. Trying to time the market
Market timing is tempting but deceptive. Investors often convince themselves they can wait for the right time to buy or sell a stock. However, experienced investors understand that market cycles are unpredictable, so staying invested for longer is typically the best approach.
"You shouldn’t buy stocks unless you expect to hold them for a very extended period and you are prepared financially and psychologically to hold them," Buffett had said during Berkshire Hathaway’s annual meeting in 2020.
If you are investing for retirement, you need to make sure you are picking the right stocks. Also, you need to make sure you are planning correctly to meet your short-term goals without having to cash out your portfolio.
You can get a shortcut for understanding which stocks are worth buying and holding with Moby. Their superior research can help you reduce the guesswork when selecting stocks and ETFs.
With easy-to-understand formats, their team of former hedge fund analysts and experts demystifies the stock market, so you can become a wiser investor in just five minutes.
In four years, across almost 400 stock picks, Moby’s recommendations have beaten the S&P 500 by almost 12%, on average.
3. Hedging against volatility
Real estate has historically been less speculative than stocks, with stable returns generating a steady stream of passive income. It is often touted as one of the best avenues to build wealth — a move that can pay off brilliantly for your retirement.
However, with home prices steadily increasing over the past few years, direct ownership of residential real estate might be challenging.
But that doesn’t mean you can’t tap into the $30 trillion home equity market, with real estate crowdfunding companies that let you invest in residential properties without constantly worrying about mortgage or home maintenance expenses.
For those who prefer accessible fractional investing, Arrived — an online platform backed by prominent investors like Jeff Bezos — offers retail investors the opportunity to buy shares in existing rental and vacation homes. You can get your foot into the real estate market without buying property outright.
With Arrived, you can browse a curated selection of homes, each vetted for their appreciation and income potential. Once you find a property you like, you can choose the number of shares you want to buy and start investing in real estate with just $100.
A recent report from Cushman & Wakefield also commented, “for the first time in years, the retail market is at a point of being supply-constrained — at least for space in quality shopping centers."
With both commercial and residential supply constrained, rental prices could be pushed higher, creating attractive returns for investors.
For accredited investors looking to expand their portfolios and make a larger allocation, First National Realty Partners (FNRP) offers accredited investors access to retail-anchored real estate investments, without the legwork of finding deals yourself.
The FNRP team has developed relationships with shopping centers and health-care facilities across the U.S., as well as the nation’s largest essential-needs brands, including Kroger, Walmart and Whole Foods.
They also offer white-glove service for investors, providing key market insights and finding the best properties both on and off-market, while investors can passively collect distribution income.
You can engage with experts, explore available deals and easily make an allocation, all in one personalized secure portal.
Another option for diversification outside of the stock market (and protecting your retirement savings) is to invest in private real estate funds, such as those offered by DLP Capital.
DLP Capital offers accredited investors tax-advantaged, private REITs through various investment funds, which are primarily focused on acquiring or developing safe, affordable rental housing for working families in the U.S..
The firm offers a flexible investment structure so that investors can redeem their capital if needed without having to wait a set number of years during lengthy lock-in periods.
With a track record of identifying high-potential properties and over $5.2 billion in assets under management, DLP Capital helps investors capitalize on real estate’s long-term value.
DLP Capital’s funds target potential annual returns between 9% and 13% — almost at par with the S&P 500 index’s 10.26% returns annually. But you get two distinct advantages by investing in DLP Capital’s funds — portfolio diversification and a potentially lower tax bill.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
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