Warren Buffett is one of the world’s greatest investors of all time. More than his investing knowledge, I like the way he teaches complex concepts in simple terms. I have been reading books about him, listening to his talks, watching Berkshire Hathaway's annual meetings, etc. He is one of the very few people who’ve had a significant impact on my thinking. Here are the top 5 lessons I’ve learned from him (in no particular order):
1. Become a learning machine
- Warren Buffett highly recommends continuous learning. He has a lifelong commitment to learning. Reading books is one of his ways of being a continuous learner. He reads for approximately 4-6 hours a day.
- “It’s good to learn from your mistakes but it’s better to learn from others’ mistakes”, he said. I completely agree with him. If you aren’t growing and learning, you’re falling behind. Charlie Munger considers him to be a knowledge compounder.
2. Understand the power of compounding
- He says most of his wealth is built due to luck, being born in America, and the power of compounding. He is just a big fan of compounding and urges everyone to understand the power of compounding and implement it in day-to-day life.
- It’s from him I learned that compounding can not only be applied to investing but also to knowledge. His famous quote on compounding knowledge, “read 500 pages every day. Knowledge builds up like compound interest.”
3. Invest in yourself
- You are your own biggest investment. You can overcome many mistakes if you never stop investing in yourself. Invest in becoming the best person you can be.
4. Never bet against America – Invest in S&P 500
- He believes that the American economy will continue to prosper and generate an adequate or acceptable return on investment. He urges to never bet against American capitalism. So far, it has grown time and time again.
- He says that the future generation will always have a better quality of life than the current one. So, invest in S&P500. Buy and hold.
5. Become a public speaker
- Most of the success in life comes from the ability to communicate. During his early years, he was shy about communicating. He took Dale Carnegie’s course on public speaking. He considers it to be the biggest investment in his life. It is evident from the way he speaks. He teaches complex concepts in simple terms that anyone can understand.
Conclusion:
The biggest lesson I’ve learned from Warren is to be a learning machine. Any skill can be acquired if you have the skill of learning. It’s good to learn from your mistakes but better to learn from the mistakes of the others. Reading is one of the best ways to learn from others. Always be reading. Trust compounding!