According to Forbes magazine , Warren Buffet became one of the richest man in the world through stock market and investing. What kind of returns he must be making annually ?
- 50 % ?
- 40 % ?
- 30 % ?
- 20 % ?
Buffet made close to an average of 22% a year and became one of the richest man in the world !!
This 22% return and lots of time , allowed him to turn $ 100 into billions.
If we do some more research , as per the official story , he made his first profits by managing funds for friends and family and took percentage profits.
So, what is the biggest take away from Warren Buffet's success story ?
One doesn't need to make extremely extra- ordinary returns from Markets to create wealth.
This relieves huge pressure from the mind of investors. A consistent return of even 2% means we are clocking something like 24% in a year, and this is sufficient enough to create good , meaningful wealth in the long term.
So, what should be done to achieve these returns. One thing is sure that market is not so simple that it will give you these returns just by following news or just by timing the trades.
Become a buyer in rising market and become a seller in falling markets – Easier said than done.
You need to have a firm strategy in place to capture these returns from the market. And if a good strategy is in place, inspite of all the volatility , a return of more than this is achievable , on consistent basis.
Now if in your trading, you are able to make those kind of returns, excellent – keep doing it the same way, do not change anything. Why to change something if its working well !
But if you are not somewhere close to even these kinds of returns, you must think of realigning your process with some more inputs in terms of learning tried and tested strategies. Its worth it. There are only two ways of learning – learn it by actual experience , which is a long drawn process and second is learn it by others experience , which can be done in a very short period. In any case, its not worth trying to invent wheel from scratch , every time!