2 financial tips for the average person from warren buffet


MR. WARREN BUFFET'S FINANCIAL TIPS FOR THE AVERAGE AMERICAN (AVERAGE "ANYONE," REALLY)

1. Avoid Debt. Especially Credit Card Debt.

Warren Buffet says, "Well, you never want to owe money you can't pay. I'm basically against debt. I mean, I think the average individual will live a lot happier life if they avoid... They certainly ought to avoid credit card debt.

I mean, there's no reason in the world to pay 18% for money... I can't make money paying 18% for money so, why should people up and down the street do that?"

[Credit card interest rate in the Philippines is around 3.5% a month so, that's 42% a year!]

2. If You Have Savings, Buy Funds Monthly and Buy Them for the Long-Term. Do Not Dance In and Out of It.

Warren Buffet says, "If you have savings, and it's a good idea to have them if you can, just buy index funds and just buy them every month. And don't listen to financial advisers like me (laughs), don't read financial pages or... You don't need to do it.

I mean, if you buy a farm, you don't get a weather forecast every morning, you don't get a quote on the farm every morning -- you look at the farm itself and say, 'Is this farm going to produce so many bushels an acre of corn, of soy beans, and is that satisfactory in relation to what I pay?'

If you buy a piece of American industry, and you get a cross-section, you're going to do well over 10 or 20 or 30 years. But you're not going to do it if you're trying to dance in and out everyday.

The Dow Jones Average started the 20th century at $66. It ended at $11,400. You say, 'How could you lose money entering a period like that?! (laughs)' A lot of people did because they tried to dance in and out.

But American businesses have done fine for investors over a long period of time, just like American farms have done fine for people, American apartment houses have done well for people over a long period of time. You can't dance in and out of them."
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