Invest Like a Pro

You can invest like the great investor Warren Buffet. I know most people feel like they have to be a pro in investing but every journey starts with your first step.Here are three simple tips to help you begin.

1. Keep your investments simpl .A decade ago, Buffett made a $1 million wager with hedge fund manager Ted Seides. The bet boiled down to a fundamental question: Can professional investors beat average market returns over time? Buffett went with a low-cost mutual fund that tracked the S&P 500 index, while Seides chose a handful of actively-managed funds that invest in a bunch of hedge funds.

Who won? Buffett, of course. The annual return, net of fees, for the S&P 500 fund bested its collection-of-hedge-funds rival by nearly five percentage points. Seides, undeterred, has proposed going double or nothing.

Buffett’s strategy was nothing new for him. He has always trumpeted low-cost mutual and exchange-traded funds as the best investment vehicles for the average person. That’s even how he wants his children to invest.
You can establish a diversified portfolio with just a few index funds, or take a completely hands-off approach with a balanced or target-date fund. For additional safety, sprinkle in some certificates of deposit.

2. Be very picky with individual stocksA riskier approach is to pick stocks based on a Buffett-like strategy. Don’t try this with more than 5 to 10 percent of your portfolio.
Buffett is known for his “value tilt”: He wants his Berkshire Hathaway holding company to buy up solid businesses for less than they’re worth a fair price than a fair company at a wonderful price” is something of a mantra for Buffett and his second-in-command, Charlie Munger.

Buffett isn’t looking for the cheapest bargains but for companies with good future cash flows, return on capital and intrinsic value, or brand. He loves companies like Coke that tell a good story and are so deeply intertwined with their customers’ tastes that any competitor will have a hard time making up ground.

When no good option appears, Buffett will pile up cash, as he’s done recently.
These guidelines have helped Berkshire beat the S&P 500 by nearly 10 percentage points annually since 1965.

3. Don’t be afraid to stumble .This one is easier said than done, but even Buffett makes mistakes. He has been a big fan of Wells Fargo, the San Francisco-based banking behemoth mired in scandals, as well as IBM, the technology giant that has seen declining revenues for the past five years.
Buffett also famously missed out on Amazon and Google, and this year he admitted defeat on his Wal-Mart gambit.

Rather than dedicate a small active portion of your portfolio to picking stocks the way Buffett chooses companies, you might simply buy shares of Berkshire Hathaway.
While you may never be Buffett, you could at least own some of his future success.

Acorns have a Auto Investment app that allow you to invest with ease.

acorns.com/invite/RDC5GJacorn










​

---