Investing 101: wise words from the masters

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Nonhlanhla Kunene | 08 November 2016

Investing can be quite complex. The amount of knowledge required coupled with the very real possibility of ending up with less than what you initially put in, can be nothing short of frightening.

If you’re serious about building long-term wealth and giving your future self a shot at a decent retirement, you’ve got to put aside your fears and reservations and take the plunge. With all the tips and advice at our disposal however, knowing where to start, what to buy and how to go about it can often leave us with a serious bout of decision paralysis from the information overload.

To declutter your minds and help simplify things, we’ve put together some of the best advice ever given by some of the world’s best known investors. You’ll be surprised to find that sometimes, maybe simplicity really is the ultimate sophistication.

To get you started, J. Paul Getty, founder of the Getty Oil Company, couldn’t have said it more simply:

“Buy when everyone else is selling and hold until everyone else is buying. That’s not just a catchy slogan. It’s the very essence of successful investing.”

Warren Buffet, viewed by some, as one of the most successful investors of all time, is a firm believer in knowledge and long-term investing, coupled with a dash of common sense, as stated in some of his famous sayings:

“Never invest in a business you can’t understand.”

“Risk comes from not knowing what you’re doing.”

“Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.”

“If you are not willing to own a stock for 10 years, do not even think about owning it for 10 minutes.”

Reiterating Buffett’s sentiments on the importance of knowledge is the legendary Peter Lynch. With an annual average return of 29% during his 13 years managing the Fidelity Magellan Fund, you’d be foolish to overlook his advice:

“If you’re prepared to invest in a company, then you ought to be able to explain why in simple language that a fifth grader could understand, and quickly enough so the fifth grader won’t get bored.”

“If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.”

“Behind every stock is a company. Find out what it’s doing.”

Another believer in the benefits of long-term investing is personal finance guru, Suze Orman who says:

“Never, ever invest money that you will need prior to three to five years – minimum,” and

“Money you won’t need for at least seven years is money for investing. The goal here is to have your account grow over time to help you finance a distant goal such as building a retirement fund. Since your goal is in the future, money for investing belongs in stocks.”

Last but not least; if you’re totally new to investing, here’s a heads up from investment author, Jim Rogers:

“Index investing outperforms active management year after year.”