What comes to mind when you think of billionaires? 

The modern representation is lavish lifestyles filled with yachts and other super toys. As these are the billionaires most frequently showcased and presented in the media.

In reality, the vast majority of billionaires are characters who keep low profiles and rack up their continuous wealth overtime. In other words, billionaires are typically simply really really smart with their time and money and take their calculated risks and expenses very seriously. 

A person who embodies the above definition is Warren Buffett, perhaps one of the most famous traditional billionaires and icons in the finance industry. 

What were Buffett’s keys to success? In this article, we’ll be breaking down exactly that, sharing some of Warren’s tips for success in business and life.

Who is Warren Buffett

Warren Buffett is an 89-year-old business magnate, investor, and philanthropist. He is widely regarded as one of the world’s most successful investors, with a net worth of nearly $90 billion to show for it. 

What contributed to Warren’s unprecedented levels of success? Was it merely luck? Good timing? A vast wealth of knowledge and decades of experience? 

Here are some of the valuable life lessons that Warren contributes to his success: 

 

1. Never Lose Money

 

Warren’s #1 rule in every interview or piece that’s been published is always “Never Lose Money”, and rule #2 is always “Never forget rule #1.” 

While this may seem virtually impossible, especially for someone who’s wealth is majorly attributed to investing in the stock market, which can be incredibly volatile.

However, the foundations of the rule are very solid. Warren doesn’t make financial decisions without a highly calculated plan, and ensures a great diversity in his portfolio to account for any losses that some of his segments may face.

2. Invest in Businesses, Not Stocks

Another famous line from Buffett is that he doesn’t invest in stocks, he invests in the business behind them.

After all, what is a business without the team running it and following the vision that created it? 

No matter how appealing a certain stock or investment opportunity may seem off of numbers alone, Buffett takes the time and effort to ensure the business and team itself are just as sustainable. 

The reason why most investors fail to follow Buffett’s advice is that this method is often much more time-intensive than just relying on the performance of the stock itself. This is great advice to follow not just for investing, but for where you spend your time and energy as well.

3. Live Below Your Means 

Warren is a long time advocate and example in living below your means, and he continues to preach the same, especially to younger business people. 

For Warren, the key to staying rich is not living like you’re rich. This doesn’t have to go to extremes of course, but important factors to keep in mind are monthly expenses like rent, transportation, and other necessities.

For example, Buffett still resides in the same 5 bedroom house purchased in Nebraska in 1957. Buffett, however, is also a big advocate of spending money on quality experiences rather than material possessions.

4. Avoid Fads

One of the many reasons that Buffett has been successful for as long as he has is his ability to make consistently calculated decisions and not fall victim to fads and short-lasting trends.

While these trends may seem incredibly appealing at the time, especially when it seems everyone around you is profiting, keep in mind that they always end the same way. 

However, some of Buffett’s decisions regarding this have been quite controversial, such as his refusal to invest in new-age social media technology companies such as Facebook and Google citing the difficulty in determining the long term value of them. 

Instead, Buffett prefers bets that are consistently proven, steadily growing, and relatively safe in respect to the rest of his portfolio.

5. Be Ready For The Long Haul

No matter what industry you’re in, whether its finance, marketing or sales, chances are the longer you’re involved and improving, the greater chance you’ll have for success.

Additionally, sometimes the biggest bets take the longest times to play out, especially in the stock market. 

Warren’s advice after picking a business with a highly calculated risk? Keep a close watch on it, and strap in for the ride.

6. Risk is Part of The Game

As traditional and risk-averse Buffett’s strategy is to investing and business, he accepts that risk is an unavoidable part of the game.

Whenever you invest in a company, you’re taking a risk. No matter how solid their financials are, or how well the team itself is performing on a day to day basis, the unexpected has been known to happen time and time again, destroying otherwise “risk-free” bets. 

Instead of trying to avoid risk, Buffett instead focuses on calculating and minimizing it through his overall buying strategy.

7. Develop Your Communication Skills

Buffett frequently says that the most important asset to invest in isn’t any particular company or stock — it’s yourself.

One of the many ways that Buffett began to cement himself and his ideas in the finance industry was through his persistent and compelling public speaking and communication skills.

When you hone your public speaking skills and are able to effectively share your knowledge, and connect with an audience, you’re setting yourself up for success that will last much longer than any specific venture you’re involved with at the time.

Buffett himself used to be terrified of public speaking, even going so far as to getting physically ill before a speech, but to this day attributes it his most valuable skill. Being able to effectively engage and communicate with your customers and clients is the most effective way to increase value. 

Conclusion

Do you agree with Buffett’s approach to investing and life? Even if you don’t it’s hard to ignore the results he’s produced over his lifetime.

At the end of the day, Buffett preaches taking the necessary time to invest himself in his investments, living below his means (no matter how high they may be), and establishing real relationships through effective communication. 

It’s yet to be seen if these are the everlasting keys to success, but it’s definitely worth implementing into your own life and business.

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