Warren buffett's (The easiest way to make money in Stock Market )

     warren buffett's  (The easiest way to make money in Stock Market )

• Warren buffett's five investing tips for people who don't follow the stock market want an investment strategy that the oracle of omaha would approve of you don't need to spend countless hours courging financial statements and reading stock reports warren buffett has a pretty simple strategy that he thinks is the best way for the overwhelming majority of people to invest number one buy s p500 index funds while buffett is without a doubt the world's most famous stock picker he doesn't think most people should invest in individual stocks for years he's embraced s p 500 

index funds as the best way for most americans to build wealth by investing in an s p 500 fund you become an automatic investor in all500 largest companies who stock the index track including berkshire hathaway amazon apple facebook google and so on buffett has left instructions in his will stating that 90 of his personal wealth should be invested in the s p 500 index funds the remaining 10percent will 

be placed in short-term u.s treasuries although buffett is along-time proponent of index investing for most people berkshire hathaway only recently added two s p 500 funds to its portfolio february its 13f filing revealed that it had purchased shares of the vanguards p 500 etf and spider etf though combined the funds still make up less than one percent of berkshire hathaway's holdings let's take a moment and see what warren buffett himself has to say about invest in index fund so i would pick a broad index but I would don't toss a

Chunk in at any one time i would do it over a period of time because the very nature of index funds is that you are saying i think america's business is going to do well over reasonably well over a long period of time but i don't know enough to pick the winners and i don't know enough to pick the winning times there's nothing wrong with that i don't know enough to pick the winning time so ccasionally i think i know enough to pick a winner but not very often and i certainly can't pick winners by going down through the whole list and saying this is a winner and this isn't and so on so the important thing to do if you have an overall feeling that businesses reasonable place to have your money over a long period of time is to invest overa long period of time and not make any be tim plicitly by putting a big chunk in at a given time as to the criteria as to when you should or shouldn't i don' think there are any great criteria on that i don't think price earnings ratio you know determines things i don't think price book ratios price sales ratios idon't think any there's no single metric i can give you or that anyone else can give you in my view that will tell you this is a great time to buy stocks or not to buy stocks or anything of this sort it it just isn't that easy that's why you go to an index fund and that's why you buy over a period of time it isn't that easy you can't get it by reading a magazine you can't get it by you know watching television you can't you'd love to have something that said you know i mean that that you know if pe's or 12 or below or some number you're buying if they 're 25 or above yourself it is it doesn't work that way it's it 'sit's a more complex business than that it couldn't be that easy when you think about it so if you are buying an index fund you are protecting yourself against the fact that you don't know the answers to those questions but do you think you can do well over time without knowing the answers to those questions as long as you consciously re cognize that that fact and uh you know i would if you're a young person and you intend to save a portion of your income over time i just say just pick out a very broad index and i would i would probably use the s p 500 because i think if you start getting beyond that you start starting to think you should be in small caps this time and large caps that time or thi s foreign side and as soon as you do that you know you're in a game you don't know you know you're not equipped to play in in all candor that would be my recommendation 100 years ago one share of snp 500 wast rading at less than 

10 dollars you can also call it points since it's an index fund but for simplicity we'll stick with dollars now one share costs nearly three thousand five hundred dollars so if you would have invested 100 years ago and withstood all the fluctuation sand volatility you would have generated 350 times your money today not bad at all not doing any financial research and still becoming wealthy on average s p 500 generates 10 percent annual compound rate as albert einstein once said compoundinterest is the eighth wonder of the world he who understands it earns it he who doesn't pays it number two keep the fees low most fund managers who try to out performa broad index like the s p 500 will underperform in the long run as buffett frequently points out that's why he loves to slam fund managers who charge high investment fees in spite of a not so stellar track record buffett famously bet 1 million dollars that an s p 500 index could beat 5 hedge funds over 10 years of course he won the bet and donated the winnings to charity one year earlier he predicted his win in2016 letter to berkshire hathaway shareholder sand fund manager fees were a 

major factor quote when trillions of dollars are managed by wall streeters charging high fees it'll usually be the managers who reap outsized profits not the clients buffett wrote so when you invest in s p 500 index funds look for the one with the lowest expense ratio possible the lower the expense ratio the more of your money actually goes into the investment for example if you invested one thousand dollars in a fund with a zero point one percent expense rationi ne hundred ninety nine dollars of your money would be invested and there maining one dollar goes toward fees in case you were wondering the  guard and spider etf that berkshire hathaway own shave an expense ratios of 0.03 and 0.09 percent respectively  

number three pay off credit cards before you invest berkshire hathaway's 2020 shareholder meeting held virtually in may buffett was asked about the state of the credit card industry he used the occasion to remind the world of the high cost of carrying a credit card balance even though berkshire hathaway often profits from credit cards given its heavy financial sector holdings buffett told the story of a friend who sought his advice about what to do with her money he asked her if she had credit card debt she did with an apr of 18 buffett told her thatthe interest savings from 

paying off the credit card debt would be far greater than she could earn from any investment quote i don't know how to make 18 he said number four practice dollar costa veraging buffett isn't a fan of market timing in february at the start of the coronavirus pande miche told cnbc quote you can't predict the market by reading the daily news paper like his mentor benjamin graham buffett is a proponent of dollar cost avera gingin which you invest regularly at fixed intervals no matter what's happening inthe stock market so when he recommends funds that track abroad-based index like the s p 500 for most investors 

it's with a caveat don't put your money in all at once do it over a period of time number five invest with a long-term horizon some of buffett's greatest words of wisdom are about the importance of long-term investing regardless of whether you follow his advice and stick with passively managed index funds or pick your own stock she suggests you ignore short-term results no one can predict what migh happen in the stock market in the short term most of the time financial news is all just random noise focus on the long-term investing have a time horizon in decades not in days or weeks buffett believes you can count on good results over time as he put it in his 2016 letter to berkshire hathaway share holders american business and consequently a basket of stock sis virtually certain to be worth far more in the years ahead let me know what you guys think about investing in index fund leave your thought....