Warren Buffett's advice: major mistakes in personal finance

From more listening Tips about the moneyIt is not one of the richest people in the world? When the famous billionaire Warren Buffett acquired the company Berkshire Hathaway in 1964, its cost was $ 19. By the end of last year, it has cost $ 114.214 and to keep pace with the rising cost of 19.7% per year for the past 48 years. Judging by Warren Buffett manage your moneyHe should trust in this matter. And this applies not only to invest, but also to personal finance.

Warren Buffett

US billionaire, the largest investor with a fortune of 46.5 billion dollars. "Oracle of Omaha" is considered to be the second richest man United States, and one of the richest people in the world. Its first profit Buffett earned at the age of 6 years, 11 tried his hand at the stock exchange. In 2008, according to Forbes Buffett version was the richest man in the world, and in 2010 he handed over half his fortune to five charitable foundations, which was the most generous act in history.

According to the famous billionaire, there are two simple mistakes in terms of personal finances, which are very dear to us cost.

Well, I think that the biggest mistake - it does not get used to save from the beginning, because the economy - it's a habit. And the second mistake: trying to get rich quickly. Slowly improving their financial condition easily and get rich quickly - no.

When it comes to money and investing it is easy to fall into the trap and decide what savings can wait, but now the best option - to invest in new areas, which no one knows. Be that as it may, such a thought - a big mistake.

an excellent example

Consider the example of two people 25 years: David, who earns $ 40 thousand. per year, and Michael, who makes $ 80 thousand. Each year, their incomes grow by 2.5%, and they will work up to 73 years.

The only difference between them is that David began to save 10% of their income, since as he turned 25, and Michael decided to wait with the economy, until he is 40, and while it will not make $ 115 thousand. in year.

And, of course, they do not keep their money under the bed, and send them to the bank, for example, at 7% per annum.

By the time each of them will turn 50 years, they put aside about $ 144 thousand. on retire. But when they will retire at 73 years old, guess which of them will have more money?

Despite the fact that David lifetime earning less than half the money than Michael, he would be 10% more funds. David will be $ 2.3 million in savings, and Michael - $ 2.1 million.

And even more remarkable is that Michael put into storage by 60% more of their money than David (Approximately $ 610 thousand. I laid out from the purse, Michael, and $ 375 thousand. - David)

If we imagine that their money will grow by 8.5% per year, at the end of David will be 30% more money than Michael - $ 3.7 million. in stock, compared with $ 2.9 million.

What follows from this

Very often begin to speak to investors: "To make money, you need to first have them," but that they were, We need to save.

TOak Buffett argues, it is important to get used to the savings from the very first steps, and to understand that wealth It does not come immediately, but gradually, over a lifetime.