Investing during 2016

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With the new year upon us, every investor is looking for words of wisdom that can motivate them to achieve their lofty goals. Luckily, there’s no shortage of sound investment comments and quotes for those who actually care to listen. Here are great quotes from some of the world’s brightest people.

“An investment in knowledge pays the best interest.” – Benjamin Franklin

This timeless quote from one of the Founding Fathers of the United States offers some great insights. It is also surprisingly straight forward and means exactly what it says. In the context of investing, this quote essentially states that you need to invest in yourself and your abilities if you hope to get a good return on the market. Successful investors aren’t born, they are developed through years of self-education, patience, practice and careful analysis. If you plan on being a market participant for the long-haul, be prepared to feed your brain new knowledge every day.

“The individual investor should act consistently as an investor and not as a speculator.” – Benjamin Graham

The father of modern value investing certainly gets it right by reminding you to base your financial decisions on facts and analysis rather than on the opinions of those around you.[1] The markets have a way of warping the mind sometimes, filling investors with the “irrational exuberance” that often leads to asset bubbles and market crashes. If you plan on sticking it out long-term, you may decide to become an investor and not a speculator. While speculation certainly has its place, it may be better not to form the basis of your portfolio.

“Price is what you pay; value is what you get. Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.” – Warren Buffett

The Oracle of Omaha is known not only for his massive investment wealth, but in his ability to tell a story in clear, precise language. This passage, taken from a 2008 letter to shareholders,[2] effectively explains what so many investors don’t seem to grasp in the market. For some reason, we are able to see the relationship between price and value in every other facet of life except the market. This passage reminds investors that they may better base their decision to invest on the quality of the company or underlying asset they are considering. Once you identify a company or asset with real value, you may buy it at a discount as soon as you can.

“It’s not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for.” – Robert Kiyosaki

Robert Kiyosaki reminds us that it doesn’t matter how much money we make in the market if we end up losing it sometime down the road. Investing isn’t just about making trades, but building wealth for yourself and your family. The money you invest needs to work for you; it needs to make you richer over the long-term. In order to make that happen, investors need to develop a long-term strategy and protect their positions from needless risks. That’s why risk management is so important in the market.

“All you have to do is buy cheap and sell dear, act with thrift and shrewdness, and be persistent.” – Hetty Green

If you’re not familiar with Hetty Green, she was a 19th century investor who turned $5 million into $100 million over a 50-year period, making her the richest woman in the United States.[3] Her timeless quote harkens back to what we already know – that hard work, persistence and buying low and selling high are the keys to success in finance. If we apply these traits with consistency, we may be able to compound our wealth over time.

[1] David Bakke (May 16, 2011). “The Top 17 Investing Quotes of All Time.” Investopedia.

[2] Schuyler Velasco (August 30, 2013). “Ten pieces of investment advice from America’s greatest investor.” CNBC.

[3] Forbes. The Best Investment Advice of All Time.

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