Warren Buffet is nicknamed The Oracle for good reason. When you have as much money as he does, people care what you have to say. Not only that, they hunt you down and insist that you say something.
Normally, Buffet’s philosophy is “be greedy when others are fearful,” meaning one should buy assets when everyone else is panicked and selling off. But, right now, he’s just stockpiling cash. His reported cash reserves were $137 billion at the end of March. So, it seems like he might just be alright.
But he’s not buying much. It makes sense, when you consider his other main philosophy is: do not invest in anything you don’t understand. Since he’s no doctor, and even the doctors seem to be learning about Covid-19 as they go, it makes sense that he’s not sure where to put his money during the age of Corona-mania. Ageless wisdom says: when in doubt, do nothing.
But he’s not actually doing “nothing.” It’s a very smart strategy to stockpile cash so that you’re in a strong position to act when the time is right. Many people panic that if they’re not buying a house RIGHT NOW or investing RIGHT NOW, when prices are low, then they’re just bleeding money. It’s not true. It’s better to hold off on investing when you’re just barely making ends meet. You want to be in a strong position before you put yourself out there. If you’re going to do anything – such as invest in real estate, or buy your first (or next) home, there are a few things you can do to be like The Oracle:
- Beef up your savings account. Just because you received your stimulus check doesn’t mean you need to spend it. If you don’t need it for the bare essentials right now, hang onto it. You might need it later for any number of things, including a healthy down payment on a home.
- Pay down your credit cards. Buffet also advises that the first thing people should invest in, if they have credit card balances, is to pay them off. There are few, if any, investments that can make you a return that outpaces high-interest credit cards. You don’t want to invest in something that pays you 7% if you’re shelling out 18.9% interest to the Master (card).
- Don’t jump into anything you don’t fully understand. What concerns me about the Covid protesters, even though I feel their pain, is that they aren’t medical professionals. The people trained in this stuff seem to think we should be cautious about reopening. People who know absolutely nothing, though, are 100% sure we should just get back out there. I, myself, always side with reason, advice from the experts. If it’s even remotely safe to reopen, let’s do it! I’m so sick of lockdown, I don’t even know what to do! But let’s make sure we truly understand the situation before we jump right in. After all, The Oracle says so!
Anyway, I hope these tips are helpful. Let’s make post-quarantine-America much more awesome than it’s ever been! And that starts with all of us being responsible with our finances, and making wise decisions.
If one of those wise decisions for you this year is to purchase or refinance your home or investment property, I can help. Contact me now or find out how much you can save by lowering your interest rate.
Be safe out there and I’ll see you next time,