The investment guru Warren Buffett follows a few simple rules when he goes shopping.
Warren Buffett is better known for picking value stocks that can make you wealthy over the long term. But, investment guru Warren Buffett also has an invaluable piece of advice for shopaholics, especially the people who started investing late and need to catch up.
The worlds most successful stock investor is frugal to a fault .With a net worth of almost $ 4,000 crore (Rs. 2,48,000 crore), he can live in the swankiest of residences, but, though he has investments in property, he chooses to live in the home he bought in 1958, in Omaha.
Warren Buffett looks at the age-old saying that a penny saved is a penny earned through the telescope of compounding. For him, a penny unwisely spent is a pound lost. His reasoning is simple.The Rs. 30,000 you blow on unnecessary items today would have become Rs. 3 lakh in 16 years if you had invested prudently.
So, the new smartphone could actually cost you Rs.2.5 lakh and upgrading to a new car could leave you poorer by Rs. 25 lakh. Its a wake-up call for late starters. You must learn to differentiate between needs & wants. If your 6 year-old car is giving too much trouble & your family has grown, you must upgrade to a new and bigger vehicle.
Thats a need you cant avoid. But, if you bought your car just 2 to 3 years ago & want to upgrade to the new model launched recently, thats an unnecessary expense. Go ahead if you have saved enough and can afford to splurge on these luxuries, but exercise restraint if your savings are falling short of your goals.
The proliferation of plastic money & easy financing schemes has made this increasingly difficult. Before, you swipe your card, remember what Warren Buffett has to say about unnecessary spending: If you buy things you dont need,you may soon have to sell things you need. Dont let todays desires force you into a penurious tomorrow.
From ET WEALTH
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