10 gems of wisdom from the world’s greatest investor that could help to change your fortunes

Every investor dreams of being the next Warren Buffett, the self-made US billionaire who bought his first stock age 11 and is now worth more than $93.4 billion, according to Bloomberg.

Mr Buffett is the most famous investor in the world and the third-richest person on the planet, but he is admired for more than his money.

The so-called “Oracle of Omaha” is renowned for his folksy words of wisdom, which have made him a cult figure to many. The 87-year-old is also a generous philanthropist, giving away more than $27bn in the past decade.

His investment vehicle Berkshire Hathaway has grown at an annual rate of just over 20 per cent since 1964, more than double the average annual return of 9.7 per cent on the S&P 500 index of top US stocks.

If you had invested $10,000 in the company in 1964 you would now be worth more than $240 million, multimedia financial-services company The Motley Fool calculates.

Mr Buffett may have started young but don’t despair, he made 99 per cent of his wealth after his 50th birthday. The following 10 gems could help make you richer, and potentially save you a lot of money as well.

1 Rule No 1: never lose money. Rule No 2: never forget rule No 1

Steven Downey, a chartered financial analyst candidate at Holborn Assets in Dubai, says this is key to Mr Buffett’s down-to-earth approach. “Everyone dreams of doubling their money overnight but most successful investors built their wealth over a long time through shrewd investing and minimising large losses.”

Early losses can easily derail your long-term plans, Mr Downey says. “Losing, say, Dh10,000 hurts far more than earning Dh10,000 feels good, and this can make it hard to stick to your investment plan.”

Big losses are also hard to recover. “If your portfolio falls 50 per cent, you have to generate a 100 per cent return simply to get back where you were. If you lose 80 per cent, that rises to 400 per cent.”

You cannot do much about a stock market crash aside from be patient and wait for share prices to recover, but you can avoid taking undue risks, say, by going all in on one company or cryptocurrency, Mr Downey says. “Invest for the long term, stay diversified, manage risk and do not get greedy.”

And never forget it.

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