Starting out in the world of investing, we may draw inspiration and guidance from industry heavyweights from the past and present.
In this list, we have put together 15 of the most timeless quotes to help you find the courage to start making savvy investment decisions today.
“Don’t look for the needle in the haystack. Just buy the haystack!” — John Bogle
Finding the next Facebook or Apple can be challenging, but not a reason to miss out on the action. By investing in index funds you can own a slice of a wide array of companies. Index funds are affordable, enable greater diversification, are generally low risk, and generate attractive returns over time. Also, it is widely considered one of the smartest moves you can make when investing. That’s why many investors, especially beginners, find index funds preferable investments to individual stocks.
“It is remarkable how much long term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent.” – Charlie Munger
Learn to play the long game. Each reckless decision you don’t make will add up and benefit you in the long haul. As you start your journey in investing, it is essential to remember that you are still learning, and rather than trying to be brilliant, try instead to avoid making stupid mistakes.
“How many millionaires do you know who have become wealthy by investing in savings accounts? I rest my case.” — Robert G. Allen
Investing in a savings account is undoubtedly a smart move – money saved for emergencies or rainy days. That money, however, stored on a savings account will have minimal gains as the interest rates are typically meager. If you want to maximise your money, you have to make it work for you, and investing is the best way to do that. While an intimidating prospect for a beginner, it’s worth considering. Start small, get up-to-date with the basics, and make that money grow!
“Investing puts money to work. The only reason to save money is to invest it.” — Grant Cardone
This is another testament to the fact that keeping your money hostage on a savings account will ultimately lead to measly gains. Investing can foster much higher returns, especially over a long time.
“Know what you own, and know why you own it.” — Peter Lynch
Research, research, research! According to Peter Lynch, you should invest in what you know, a company that you’re familiar with, and then thoroughly investigate it. Rather than trying to predict growth, use fundamental analysis to get a thorough understanding of the company, its prospects, its competitive environment, and whether the shares can be purchased at a sensible price.
“The stock market is filled with individuals who know the price of everything, but the value of nothing.” — Phillip Fisher
Don’t take shortcuts for rapid financial rewards and focus instead on long-term gains. Thoroughly research your moves, rather than basing your decisions solely on popular opinion.
“Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas.” — Paul Samuelson
More often than not, investing is a waiting game, requiring much patience and planning. Not that you should avoid risk altogether, but rather be scrupulous with your decisions and careful not to gamble your money away. Investing is a long process that over time delivers lasting and impactful results.
“The biggest risk of all is not taking one.” — Mellody Hobson
There is a tradeoff between risk and return. To make a considerable amount of money, you must take the chance of sizeable losses. However, play it safe, and you will most likely have to settle for modest returns. As an investor, it is vital to realise what level of risk you can tolerate and how that can translate to returns when choosing investments. For example, stocks are considered much riskier than bonds because they are more susceptible to market fluctuations. Understanding differences in risk is crucial to understanding how the risk-return tradeoff works.
“Given a 10% chance of a 100 times payoff, you should take that bet every time.” — Jeff Bezos
Sometimes you need to embrace risk. Most investors will dismiss a majority of the best and most lucrative investment ideas simply because they probably won’t work. But what if they do? Jeff Bezos took those bets and became one of the wealthiest people on the planet.
“In investing, what is comfortable is rarely profitable.” — Robert Arnott
As reward depends on risk, generally, the safest investments return the least. It is important to figure out your aversion to risk and practise stepping out of your comfort zone little by little to obtain heftier gains. A solid investment strategy can have an unfortunate outcome if you lack the courage to follow it through. It is essential to know the market, but it’s important to know yourself too.
“I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful.” — Warren Buffett
A somewhat contrarian view on the stock markets, this statement directly relates to the price of an asset: when others are greedy, prices typically boil over; therefore, an investor should be wary to avoid the risk of overpaying for an investment that eventually can lead to meager returns. On the other hand, when others are fearful, it may award a good value buying opportunity.
To be fearful when others are greedy is not the same as being afraid; rather, it means being sceptical. It is crucial not to act on market hype and be mindful of what is being promoted by the media. What distinguishes seasoned investors from amateurs is their willingness to invest in a down market while exiting (the market) in a soaring market.
“A lot of people with high IQs are terrible investors because they’ve got terrible temperaments. You need to keep raw, irrational emotion under control.” – Charlie Munger
Emotions can be an investors’ worst enemy. Indeed, in the volatile ever-changing environment of the stock market, it is difficult not to give in to the impulses of fear and greed. For example, significant declines in the stock market can be incredibly panic-inducing and push you for rash decisions.
Remember that volatility is natural and inevitable. Try to focus on your long-term investment plan. Keep studying and putting in the work, and don’t let your emotions get the better of you.
“With a good perspective on history, we can have a better understanding of the past and present, and thus a clear vision of the future.” — Carlos Slim Helu
It is important not to lose perspective, even when things seem uncertain. Though the market has crashed before and is likely to again, it has also recovered and will recover again. By educating yourself on history and market trends (bullish, bearish), you can curb the likelihood of acting on fear when things get tough.
“The best way to measure your investing success is not by whether you’re beating the market but by whether you’ve put in place a financial plan and a behavioural discipline that are likely to get you where you want to go.” – Benjamin Graham
Success on the market is determined by a sound methodology and mental state, rather than luck or extreme wits. Remember that patience, discipline, and a solid work and study ethic are what’s going to take you far and deliver the most significant returns.
“You get recessions, you have stock market declines. If you don’t understand that’s going to happen, then you’re not ready, you won’t do well in the markets.” — Peter Lynch
Stock markets wobble, so do stock prices. In the unfortunate case of a recession, you must stay the course. Economic cycles include periods of growth and decline, and during a recession, investors need to remain vigilant to scan the market landscape for high-quality assets at bargain prices. These complex environments often coincide with the most lucrative opportunities. So don’t lose your cool and as always, think long-term.
As a beginner in investing, it is easy to get distracted by the copious amount of information hurled at you. That’s why it might be beneficial to take a step back and listen to the timeless advice of true finance legends. Most of these lessons boil down to a few fundamental principles. The crucial takeaways are:
- Set clear perspectives and make a long-term plan;
- Make use of index funds;
- Keep learning;
- Don’t buy into investments you don’t understand;
- Don’t let fluctuations in the market throw you off your plan;
- Learn to manage your emotions, don’t let greed or fear control your decision-making process;
- Practise patience;
- Diversify your portfolio to beat market uncertainty;
- Plan your trade and trade your plan;
- Stop trying to forecast the market;
- Research the companies you buy stock from.