Wednesday, July 28, 2010

Warren Buffer's tips for investor

1. Look at stock as part of businesses. Ask yourself "How would I feel if stock market is closing tomorrow for the next 3 years?" If i am happy owing the stock under that circumstances, i am happy with business. That frame of mind is important to investing.

2. The market is there to serve you and not to instruct you. It's not telling you whether you are right or wrong. The business result will determine it.

3. You can not precisely know what a stock is worth, so leave yourself a margin of safety. Only go into things where you could be wrong to some extend and come out OK.

4. Borrow money is most common way that smart guy go broke.

5. The stock does not know you own it. You have feelings about it, but it has no feeling about you. The stock doesn't know what you paid. People shouldn't get emotional involved with their stocks.

Saturday, July 10, 2010

Road to be a millionaire

Today we going to exploit the way how anyone can be a millionaire through investing in stock market.
Similar to buying a house, one need to have down payment before start the first investment. The first thing we need to do is start saving money today. Only spend on what you need, instead of what you want - this is a way to ensure we can start to save money.

What we are looking for is to pick the right investment that can generate stable income in good or bad time. In this case, stock market provide greatest flexibility for one to start with. Many investors think that stock market is risky and hard to make money. They lost confident due to lack of knowledge to choose the right stock or heard from friends' experience of loosing money in stock market. They never know that invest in stock market can become a millionaire if you choose the right stock, invest in good company with proper trading plan.
What is good company? The answer is simple, the company with good profit and good management. To find out this kind of company, one may need to do some homework, try to find out the company's financial status, profit level, liability and potential growth in future.... If you never do the homework, then better do not invest in stock market, unless you have a good investment adviser who can help you to do this.
Rome was not build in one day, similar to your road to become millionaire. It's a process of build wealth slow and steady, but not a very long time as others may think of. Let me give you and example of how this can be achieved.

Say if you plan to buy a new car (Honda City) with down payment of $18,000, monthly installment of $750 or yearly $9000 for seven years.

But if you change your mind of not changing the new car, instead use the money for investment for the rest of 7 years, earning 12% dividend, how long you will become millionaire?

Answer: Start to invest begin with $18,000, continue add on the principal of $9,000 every year for the rest of 7 years then stop. Let the principal continue to earn 12% dividend every year, you only need 25 years to become millionaire: