Investing wisdom from Warren Buffett


The difference in life between success and failure, more than anything else, is having a plan and sticking to it.

Whether you’re talking about launching a business, getting through Navy SEAL training, or becoming a concert violinist, success comes from seeing a plan through to completion in my opinion.

This is particularly true when it comes to investing.




The Oracle

Warren Buffett, the legendary Oracle of Omaha and by most accounts the most successful investor in history, is probably a little smarter than you or me.

But, in Buffett’s own words, in order to be a great investor, “You don’t need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beats the guy with a 130 IQ.”

So, according to Buffett, you need to be a little above average to be a good investor. But you certainly don’t need to be an Albert Einstein or Stephen Hawking.


Greed and Fear
Buffett attributes his own success to “being greedy when others are fearful and being fearful when others are greedy.”

In other words, Buffett is Buffett not because of his intelligence but rather due to his emotional control, which allows him to stick to an investing plan even when most other investors are pulling the ripcord.

Now, I don’t claim to have Warren Buffett’s talents. But some of my greatest investment successes have come from being equally stubborn about seeing a plan through to completion.


Nest Egg

I don’t have a large enough nest egg to retire today. But it’s big enough that I don’t really need to keep adding to it with fresh savings.

Even with very modest growth assumptions, the savings I’ve accumulated already should be more than sufficient to take care of me and my wife in retirement when that day comes in another 20 years. Savings I continue to add just put the icing on the cake.

It wasn’t fantastic investment returns that got me to this point. It was having a savings plan and having the discipline to see it through to completion.


Takeaway

I max out my 401k contribution every year, even when doing so is painful. Even when the market looks scary. Even when I’d prefer to blow the cash on something else or when I have to tell my children that I can’t afford something they want right now.

I’ve enjoyed competitive returns on those funds over the years, but the high savings rate has had a much bigger impact on my ability to grow my capital base than my returns.

Photo Credit: DonkeyHotey via Flickr Creative Commons

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Charles Sizemore
Charles Sizemore
Sizemore Capital Management LLC is a registered investment advisory firm located in Dallas, Texas. Charles Lewis Sizemore, CFA is the founder and Chief Investment Officer of the firm.