He is one of the most successful investors, philanthropists, a business magnate, and also a billionaire worth over $70 billion. As of 2017, Warren Buffett is considered the second richest man in the world and is famous for his investment tips and strategies. Time magazine named him one of the most influential people in the world.
Many people model his success and want to learn his strategies for creating massive wealth. And in this article, you will discover the Warren Buffett’s top 10 rules for success.
Buffett was born in Omaha, and he developed an intense passion and interest in business and investing in his youth. He was a graduate of Columbia University and he learned his investment philosophy from another great investor, Benjamin Graham, which was famous for his value investing principle.
The company Buffett runs, Berkshire Hathaway, owns more than 60 companies including Geico, Dairy Queen, and Duracell. When most youngsters are having great times playing games, Buffett started his investing career. He bought his first stock at age 11 and filed for taxes at age 13.
Together with his best friend Bill Gates, the world’s richest man, they both launched The Giving Pledge, asking billionaires to donate their wealth and Mark Zuckerberg, the Facebook founder was one of them. Buffett believed in giving back and has committed to giving more than 99% of his fortune to charity. Up to date, he has given almost $32 billion for charity purposes.
So how did Warren Buffett was able to produce such an amazing result in his life, amassing tremendous of wealth and also create outstanding success in his investing career? Well, he has a certain set of principles and philosophies when it comes to making a decision, investing, managing the business and also building success in life. And his success principles can be summarized with the top 10 rules below.
1. Find Your Passion
Almost every successful person agrees that finding and following your passion is something important if you want to produce an amazing result in life. Warren Buffett believes this as well. During an interview, he said that he was lucky to be able to discover what he loves doing at a young age. And he said that once people found their passion, their lives will change.
There is no guarantee that you will be able to find your passion in your first job, but you have to keep digging until you find it. Steve Jobs once gave a commencement speech at Stanford University and said:
“Your work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work. And the only way to do great work is to love what you do. If you haven’t found it yet, keep looking. Don’t settle. As with all matters of the heart, you’ll know when you find it.”
The only way you can produce outstanding work is through passion. Without passion, you will do things with the half-hearted approach and there is no way you can become the best this way. Thus, find your passion, do what you love and you will be able to produce amazing success in life when you do.
2. Hire Well
If you want to be a billionaire, there is no way you can go about it all by yourself, you need to have a great team. And to have a great team, you must learn to hire well. Always remember that you cannot succeed alone in this world. You need other people’s help to bring you the success you want. And your people will be your greatest assets.
According to Buffett, he emphasizes on 3 qualities when he hires, and they are, integrity, intelligence, and energy. Buffett also said that out of those 3 qualities, integrity comes first. He also jokingly said that you do not want to hire someone who has no integrity but has a lot of intelligence and energy. Integrity comes first. Without integrity, other qualities do not matter much.
Buffett is also famous for the saying, “It takes 20 years to build a reputation and five minutes to ruin it.” He strongly believed that if you want to build a billion-dollar business, you must hire someone with integrity. This is because people have to deal with money in business. And if you hire people who have no honesty, a lot of problems will arise.
3. Don’t Care What Others Think
The third rule from Buffett on success is that he does not really care what others think. And this is extremely important because if he wants to take into consideration what other people have to say, his decision will be influenced and he will never be able to hold onto his investing principles. If Buffett was to listen to what others said, he will become like most people, living an average life rather than living as a billionaire and become so successful in investing.
The same goes for you. When it comes to achieving the success you want and living your dreams, there will be people telling you that achieving what you want is impossible and simply suggest you get a real job. Never listen to the naysayer. You have to follow your heart and do what you think is right.
Warren Buffett has been known for the concept of the “Circle of Competence” that he has used as a way to focus his investment on only operating in areas he knew best. The concept basically explains that every one of us has developed useful knowledge on certain areas, and what we need to do is to operate in these areas that we are good at. So ignore what others have to say about the rest.
It is human nature to want to be likened and accepted by others. However, this will lead you to worry too much about what others think and say about you. It will also prevent you from living your best life according to your own terms. When you care too much about what others think and say about you, you will restrict your own freedom and always be their prisoner.
4. Read, Read, Read
Almost everyone knows that Buffett is an avid reader. It is said that this billionaire reads about 5 to 6 hours a day and he would also read about 6 newspapers each morning. The more you read, the smarter you will get and the more knowledge you will gain. When you become more knowledgeable, you will be able to make a better decision that will lead you to the success you want.
Buffett once said that his favorite book was “The Intelligent Investor” written by Benjamin Graham, and he said he read it countless of times before he started investing in any company. Highly successful people are great readers and you have to adopt the same habit.
During an interview, a reporter asked Elon Musk, the CEO of SpaceX about how he learned about building rockets. And Elon’s answer was simple, “I read books”, he said. Reading not only makes you smarter, it widens your perspective and shows you what is possible.
So commit to reading every single day. If you find that you are busy and do not have much time to read, start small and read for 15 minutes a day. If possible, go for more. Read at least an hour a day. You can wake up earlier and make time for reading or you can make good use of your commuting time for reading.
5. Have A Margin Of Safety
The concept of “margin of safety” first originated from Benjamin Graham’s teaching. Warren Buffett, as the most successful Graham’s disciple, learned the concept and used it wisely in his investment portfolio.
The concept is easy to understand and Buffett often uses the metaphor of driving across a bridge to explain this concept. When you build a bridge, you insist it can carry 30,000 pounds, but you only drive 10,000-pound trucks across it. You have a margin of safety of 20,000 pounds.
And when it comes to investing, you will never buy a business worth $50 million for $60 million. You will buy the business worth $50 million at a price below that to ensure there is a margin of safety. In the banking industry, a bank will never loan you money if you could only just barely pay the interest every month. The banks will make sure that you have extra to pay for the installment of the loan in case something goes wrong in the future.
This concept is essential in the principle of value investing. It helps investors making better and wiser decision before jumping into buying a stock. When an opportunity presents to you, evaluate using the margin of safety concept before you decide.
6. Have A Competitive Advantage
Buffett said that capitalism is all about somebody coming in and trying to take the castle. And what you need for your castle is a moat to protect your castle from your enemies. In the business world, your business needs to have a durable competitive advantage to survive for the long term.
Today, the competition is tough and people can copy exactly what you do and produce the same product and put you out of business. This is why having a competitive advantage to protect your business like a moat protecting a castle is important. Buffett said that he will invest into businesses that have a competitive advantage because he wants to make sure that the business will still be around after years down the road.
So ask yourself what are you good at? How can you make your product so unique and special that other people cannot copy yours? What kind of service that you can provide to your clients that can act as your competitive advantage and will make your business thrive and becomes the leader in the industry?
7. Schedule Your Personality
One of the rules that ensure Buffett’s success is that he built his businesses around his personality. Buffett said that he does not like meetings, and he builds his businesses the way he prefers and enjoys. He also mentioned that in order to succeed in what you do, you must find your pace and your sweet spot so that you will enjoy your work and perform at your best.
Buffett loves reading and he chooses to read to improve his knowledge, and then he acts as the strategist and manages his business from the backstage. He organizes his business according to his personality. And you should do the same if you want to perform at your optimum level.
Well, not everyone can be like Warren Buffett and spends 5 hours into reading every day, but what you can is to schedule your work according to your personality. If you love drinking a cup of coffee before you start your work, do it. Organize your workspace according to your own taste that will make you more productive. The key is to play to your strength and personality so that you can become the best in what you do.
8. Always Be Competing
Buffett believes that one of the most common business killers is complacency. When people fall into their comfort zone and fail to improve their competitiveness, their businesses will eventually fail or take over by the competitor.
And to stay ahead of the game, you must always be competing. Every business has problems in every industry. The key that Buffett believed will make a business thrive is its ability to compete and stand out from the rest. When the IBM stock dropped considerably, Buffett said that IBM hadn’t performed the way he or the management had expected. He also continued saying that IBM is a big and strong company, but they have big and strong competitor too. And IBM needs to improve and innovate in order to continue to thrive in their business.
Buffett also said that Geico added 700,000 policyholders in the past year, far surpassing competitors who were pulling back. And this is why he invested in Geico and the business continues to thrive because they are always competing. Therefore, never rest on your laurels, keep competing, keep improving and innovating in your business.
9. Model Success
There is no way you can succeed alone in this world. If you want to achieve great success in life, you need others. You must model other successful people, or better yet, get yourself a mentor. This is why Warren Buffett learned from Benjamin Graham and worked for him as his disciple.
Take a look in the sports industry, every outstanding and professional athlete has a coach. Tiger Woods has a coach. Michael Jordan has a coach. Usain Bolt has a coach. You need a coach to guide you in the journey to success. Your coach can also remind you of your goals and inspire you to do your best.
In business, having a mentor is said to be one of the most important keys to success. When Steve Jobs first started, he learned and got a lot of business advice from Mike Markkula. The same went for the famous motivational speaker, Les Brown. When Les was young, it was LeRoy Washington who guided and mentored him to achieve his best in life. Les Brown was labeled as “educable mentally retarded” in school, and one day, his mentor, LeRoy Washington told him something that changed his life. He told young Les Brown, “Never let someone’s opinion become your reality.”
Hence, find yourself a mentor or a coach to guide you in your business and in life. Success leaves clues and what you need to do to produce a great result is to model the success of others. Learn and study from others, and then improve yourself to become better.
10. Give Unconditional Love
Finally, Warren Buffett believes that the most powerful force in this world is unconditional love. And it is the unconditional love that he received from his father, Howard Buffett, a US Congressman that shaped Warren into who he was today.
Buffett says that his father believes in him and supports him in everything that he did. Whatever Buffett did and no matter how much money he made, his father will tell him to do his best in whatever he attempts. And this is why Buffett believes that he is able to produce an amazing result in his life. And he also suggests everyone who wants to achieve success in life, give unconditional love.
While this final rule for success by Warren Buffett has nothing to do with business strategy, it has a lot to do with your personality and beliefs. Being a philanthropist, Buffett believes in helping the society and giving back to the world. This could be the reason why he is so successful. He is always looking to help and to give, rather than to take. When you operate in a giving and helping mindset, you will put your customers first, and this is what makes a business thrive