Mistakes in investing are par for the course, but the biggest mistake an individual makes is not investing at all. Maintaining a tried and true investment discipline is literally the road to controlling your personal finances – gains and losses.
If you already invest regularly or are ready to begin on an investment path, success on the road starts with a decision to stay the course. Once you start, there’s no time for regrets. You’ve undoubtedly heard the scenarios, “if only you’d invested a year, 5, 10 or more years ago, your nominal investment would have produced substantial returns today.”
That’s why when we read articles from Warren Buffett acknowledging unfathomable mistakes, we should take it as a lesson for our personal investing path and not as a warning. Risks will always abound even for the one in a billion investors like Buffett. So you’re saying it’s interesting to hear about Buffett’s mistakes, but how does that apply to everyone else, let alone “me”?
When you scale back the billions of dollars generated by the Berkshire Hathaway conglomerate and look at the essential principles behind those investment decisions, a roadmap to “better investing” begins to emerge.
The journey starts with regular, consistent investing regardless of market conditions. Just as a road has its ups and downs, so too does the market.
Reinvest all earnings to build on the power of compounding returns.
Invest in high-quality growth companies and mutual funds whose value will increase over the long term.
Diversify your portfolio to mitigate risk.
Own various sizes of companies and funds in a broad range of industries.
As an investor, you may not be able to completely avoid mistakes, but being prepared to learn from your errors can only make the investment ride smoother as you move forward in reaching your investing goals.