Wow, talk about people who can really make money, just eight men hold the same amount of wealth as the poorest half of humanity, according to new data compiled by Oxfam.
In a report just released to coincide with the annual World Economic Forum meeting in Davos, Switzerland, Oxfam said that more accurate data on global wealth distribution indicates that the poorest half of the world’s population—more than 3.6 billion people—has less wealth than was previously thought. And just to emphasise the point it seems the top 8 richest people have greater combined wealth.
By the way, there was absolutely no surprises about who made the list of the eight richest men in the world—Bill Gates, Amancio Ortega, Warren Buffett, Carlos Slim Helu, Jeff Bezos, Mark Zuckerberg, Larry Ellison and Michael Bloomberg, whose combined net worth was in excess of $426 billion. (None of the 3.6 billion poorest people were named).
And the lesson we can learn, apart from knowing who can make money and who can’t? The majority of these billionaires are products of their innovation, with one notable exception, Warren Buffett.
This man made his fortune solely from applying astute investment practices to the share market.
Now, for all of you who recoil in horror at the mere mention of the words ‘share investment’, take note of the enormous success he has had. And amazingly, his simple investment philosophy is just as applicable today as it was 50 years ago when he started and just as effective to make money with.
The Warren Buffett Wealth Management Method to Make Money
Importantly, the notion of gambling that lots of people seem to attach to the stock market played absolutely no role in how Buffett accumulated such phenomenal wealth. “Okay, so if it wasn’t gambling then he must have been very lucky to make all this money; no doubt he started investing at just the right time”. Wrong again, Buffett’s time has always been in the ‘now’ so to speak, and his investment philosophy doesn’t stipulate that you should only invest money in stock markets during the year 1956!
His success is purely through approaching stock market investment as it is intended for, to buy equity in a business and then sit back and reap the rewards of that business growth over time. He is famously quoted as saying ‘I never sell an investment’ and his idea of long-term is as close to forever as you could get.
His investment company, Berkshire Hathaway’s share price has reached staggering values as a result of Buffett’s ability. It is currently hovering around $238,000 per share! How would you like a 100 of those ‘bad boys’, now that’s how you make money!
In fact, the Berkshire Hathaway annual meeting is always “fuller than a centipede’s sock drawer” and any of Buffett’s speeches are devoured by his faithful army of followers. Such is the power of Buffett’s annual thoughts that they have been turned into a book which is a real must to get hold of and read. Perfect for all long-term investors who have a desire to make money.
There must be a secret to making money in the stock market?
So what is his investment secret? Actually, he’s quite open about his method, and there’s certainly no “secret sauce”. In fact, he is open to all investment options as long as they make money.
The following is an explanation from Buffett’s business partner Charlie Munger, who is not as much a household name but is just as canny and astute an investor as Buffett.
Rule 1: Deal with companies and businesses that you are capable of understanding
Rule 2: The business has to have some intrinsic characteristics giving it durable competitive advantage
Rule 3: The company shall have a management in place with a lot of integrity and talent
Rule 4: No business is worth an infinite price. It has to have a price that makes sense and gives a margin of safety considering the natural vicissitudes of life.
“It’s a very simple set of ideas and the reason why our ideas have not spread faster is they are too simple. The professional classes can’t justify their existence if that is all they have to say. It’s all so obvious and so simple … what would they have to do with the rest of semester” Charlie Munger – Vice-Chairman Berkshire Hathaway
Everyone gets the same information
How about that, a pretty simple set of rules to follow, which have not only stood the test of time but have certainly been proven to work exceptionally well.
Probably the biggest difference between Buffett’s investment strategy and the average Joe is he doesn’t use the word ‘think’ when referring to a company’s prospects; rather it is a far more emphatic knowledge that propels his investing. His research into a company’s prospects is both thorough and deep yet he uses exactly the same information available to us all, would you believe.
How so? Public companies have a fiduciary duty to keep the stock market informed. Not only through their twice-yearly financial reporting but also about any immediate event that could affect their share price. Therefore detailed information about any publicly listed company is plentiful readily available, and exactly the same for everyone.
Add to this his preparedness to wait until he sees value before buying and a long-term investment horizon and ‘voila’, you suddenly have the formula to make money.
Okay it’s time to Make Money – so what’s stopping us
So what are you waiting for, it’s time to make money. Well, probably easier said than done of course. I am surprised though at just how many people don’t, want to take advantage of investing in the share market? (Are you one of them?)
Over my many years of giving advice, I have probably heard just about every excuse not to make money through investment. For some inexplicable reason, a great deal of the population seems to shy away from equity markets. I am sure there have been many theories written about why, but for me, it boils down to a few common factors. All of them I have heard time and time again.
Let’s have a look and see if any of them sound familiar.
#I just don’t have any money to Invest
By far the most common complaint of most people is that they have absolutely no money available to start investing. It’s easy to understand people saying this. The costs of living, low wage growth and a myriad of advertisements bombarding us to spend, spend, spend. At times it can be very difficult to afford even a cup of coffee, let alone devoting yourself to any form of regular savings.
But truly, no money is the poorest example of an excuse ever, in fact, on the scale of ‘what constitutes great excuses’, no money doesn’t even move the dial.
Why? Because buying a parcel of shares only requires an amount of $500 plus $21 for transaction costs. And I reckon this is a small amount to come up with to start you on your way to make money. It actually represents $10 per week saved over a year and then bingo, you have started.
Can you save $10 per week? Of course, you can and you know you can. Just do the maths – taking your lunch twice a week would probably do it. What about stop the daily coffee or the vending machine water? How about saving all your loose change over the year and put it in a tin.
As you can see there are plenty of ways to do it, some quicker than others, but all easy to do when you put your mind to it. You just need to take the first step. Start by reading this post to give you some ideas.
#I don’t know anything about stock market investing
The number 2 excuse of all time is the ‘lack of knowledge’ excuse. This excuse ranks pretty high in the ‘useless excuses’ world I can assure you. I have heard lot’s of people say ‘I would love to invest but I just don’t know enough about it.” Imagine Bill Gates saying,’ “you want me to get that computer to work, I just don’t know enough about them’.
There is actually nothing stopping anyone finding out how to do it and begin to make money. I think the word for it is ‘learning’ and it really is a normal human trait we all have. And what’s more, there is absolutely no shortage of ways you can learn these days.
There are plenty of courses, both in person and online, offered by all sorts of reputable companies. One easy way to get access to some decent investment knowledge is through Zekr or Udemy both fantastic and cost-effective resources; check them out, its well worth the effort.
There are also literally millions of blogs (like this one) that give loads of information. And books, my goodness there are literally thousands of books that can give guidance about all things investing.
In fact, I have recommended some fantastic books on this site, which will give you a wonderful start, so take a look. A really good book to start with is ‘The Intelligent Investor’ by Benjamin Graham, whom Buffett credits with teaching him the basic foundations of his investment method.
So you can actually read for yourself the book that started Warren on the path to becoming a billionaire. That’s got to be good advice and a step in the right direction to make money.
#I have absolutely no time to Learn
In any year, there are 52 weeks, and each of these weeks is divided into seven days, with each day having a total of 24 hours in it. Now as far as I can tell, it has been exactly like this since the year dot, and will no doubt continue the same for the rest of time.
During any given day, month or year, humanity has benefited from the endless contributions of people. For example, there is Charles Darwin and his Theory of Evolution, Alexander Bell invented the telephone, Shakespeare’s writings and how about the Egyptians building the pyramids, to name just a few.
All these accomplishments, plus countless others, were actually achieved in exactly the same amount of time available to all of us. No more and no less.
When someone suggests they have no time to do something, they are really saying “I am not going to make this a priority”.
So if you want to make money, you need to make it a priority.
#I am just not interested – I prefer property investment
Fair enough, there is no argument here, oh, except for these arguments.
Shares will need only $500 to begin investing, property at least a 10% deposit. The transaction costs for shares is about $21, where buying a property you have; solicitors fees, bank charges, stamp duty, ongoing maintenance, real estate management fee, strata fees if applicable, repairs when required etc. It would seem a lot of other people make money from your property investment, that’s for sure.
A property also has liquidity problems when you need money quickly. Confronted with this, you have to sell the whole house. Similar issues whilst holding shares is a different story. Just sell as many shares as you need to satisfy your money problem.
Returns for both are line ball as some years shares will outperform whilst other times property is better. However, long-term averages have always favored shares over a property. It is important though to factor in all costs when deciding which is better.
‘Horses for courses’ as my Mother would say, so this one is all down to personal preference.
#Shares are far too Risky
This is the oldest excuse in the book, I can assure you. For some reason, there are lots of people who think share investment is like ‘blindfolded rattlesnake wrangling’. No doubt these attitudes are the result of the incredible press coverage given to market crashes. Not to mention the sensationalism used to describe retirement fortunes lost through cavalier stockbrokers’ advice.
All investments carry with them some type of risk. Even bank deposit normally seen as risk-free will have their purchasing power eroded by inflation. The longer the investments term, the worse the effect. Many people fail to account for this one simple risk factor, especially if they are planning long- term investing. People actually view bank deposits as a totally risk-free way of making money.
And there are plenty more associated risks that can impact any investment. Investment risk is unavoidable, you can certainly do stuff to cut it, but you certainly can’t eliminate it.
So the next time someone tells you property investment is not risky, tell them to think again. There is just as much investment risk as with shares, in fact probably more; have your shares ever been eaten by white ants?
So what’s next – Cartography of course!
So now you know some of the reasons people concoct to refrain from investing to make money. Pretty odd, considering the success Warren Buffett has had by using methods just slightly above common sense level.
If you start investing in a small way now and keep it up, you will really add value to retirement. Add in some knowledge to help you steer around the inevitable ‘roadblocks’ and it is done stress-free and quite simply. So if Warren Buffett can do it, you can as well.
Over the next few weeks, I’ll add knowledge and information to help you plan and execute your in- vesting. So don’t waste any time now, start examining how you can free up some money for your long-term investment plan. But don’t do any major lifestyle sacrifices; the best type of money to make money is right around the ‘edges’ so to speak.
Here are some excellent ways that you can save money to invest. Take a look, you’ll find it useful.
It is also a good time to begin looking at education, so get hold of some books, maybe look at Udemy or some other provider, and browse around for information on the web. Start to build your knowledge in readiness for our next phase, commencing the investment plan.
Until then, I look forward to any comments or questions you have, so please do so below.
By the way, if you have any specific investment questions why not go to the contacts page here, and send it to me. I would be most happy to respond. Remember though I can’t give specific stock selections. So what are you waiting for?
Thanks for reading, see you next time.
