Setting up for retirement saving can provide a passive income in old age is not an easy process. After all, there are a large number of options when it comes to the types of assets are available to buy. Thus, you will hard to choose one of them.
Warren Buffet’s Tips
Based on The Motley Fool, if you are confused, maybe you can listen to a potential solution given by the successful investor Warren Buffett. Obviously, this does not mean that you will become a billionaire.
However, his views on certain areas such as market cycles, leverage, and business in a particular industry can help you build a sufficient portfolio for retirement.
Making most of your purchases during a period when the stock market is down is a good strategy. Undoubtedly, it can lead to losses on paper in the short term because it is difficult to accurately predict the bottom half of the downturn for the stock market.
However, by buying stocks when they are on a low valuation and price, you can get a more profitable reward/ opportunity.
The Motley Fool explains, while many people have planned to retire using property, Buffett has always been stuck in the stock market. The only reason is his negative view of leverage. He has quoted the statement:
“If you’re smart you don’t need it and you don’t have a business if you’re dumb, then you don’t have a business if you’re smart,” when discussing the use of deep leverage.
For example, borrowing money to develop a property can pose significant risks to investors. Property prices in the UK, for example, could fall during periods of political uncertainty, while rising taxes and rising interest rates could reduce the rewards in coming years.
A better idea is investing in stocks without using leverage. It means lower risk, while the impact of increased returns over the long term could prove to be very high.
A great business
As an skillful investor, Buffett is focused on paying low prices for high-quality business. Sometimes, quality of business is an aspect of investing that some investors overlook.
Therefore, instead of looking for the cheapest stocks, buying the best companies at fair prices can be a smart move. This can increase your return on investment and increase your chances of retiring with a million pounds.
Of course, choosing the right stocks and strategies for success in the stock market is not easy. This requires a special strategy.