While we at Wall Street Survivor think we give some pretty stellar investing advice, we’d be lying if we said it all came from us.
We’ve spent plenty of time studying the investing greats, and we think you should too!
These are some of the top investing quotes that we believe every investor should know.
#10: It’s Okay to Be Wrong
“It’s not whether you’re right or wrong, but how much money you make when you’re right and how much you lose when you’re wrong.”
George Soros
George Soros is known as one of the most influential activist investors in history.
He made a lot of money in the world of investing and has gone on to use that money to support causes that he cares about.
Here, Soros teaches us an important lesson about taking your losses and accepting that not every investment is going to be a winner.
Sometimes you’re going to make money and sometimes you’re going to lose money, but it’s important to have rules in place that dictate how much money you’re willing to lose.
For example, you might hold yourself to a rule that states that you’ll pull your investment if you lose more than 5%.
Whatever your own personal rule may be, it’s important to have limits set in advance.
#9: Be a Lifelong Learner
“Those who keep learning will keep rising in life.”
Charlie Munger
Charlie Munger is Warren Buffett’s right-hand man.
He is vice chairman of Berkshire Hathaway as well as a real estate investor and guru.
Munger’s message here is a simple but important one: never stop learning.
Whether we’re talking about investing, fishing, sewing, or anything else in life, you have to commit to being a lifelong learner if you want to see yourself improve.
There are plenty of resources out there that you can use to enhance your investing knowledge. Zacks is our favorite investment research platform, and they also provide a stock list (#1 Strong Buy) that has beaten the market bigtime over the past few decades. You can access a free report from Zacks when you sign up with your email address.
#8: Understand Compound Interest
“Compound interest is the eighth wonder of the world. He who understands it, earns it. He who doesn’t, pays it.”
Albert Einstein
The speaker of this quote needs no introduction.
The famed German physicist may have made a name for himself as the developer of scientific theories, but he was clearly also smart enough to realize the importance of compound interest.
If you’re smart about your money, then you find ways to make it earn compound interest for you, such as investing in stocks. (And continually reinvesting your gains and dividends!)
If you don’t understand money, then you become a prisoner to compound interest actually working against you.
For example, you might get into some steep credit card debt that becomes very difficult to pay off as the interest constantly stacks up to increase the amount of money you owe.
Nobody wants to get caught in a cycle like that; so make sure you understand compound interest and make it work for you!
#7: Be Wealthy, Not Rich
“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 is a businessman and author who wrote the influential book Rich Dad Poor Dad.
He educates others on investing and personal finance and is famous for using debt to his advantage.
This quote from Kiyosaki outlines the difference between being rich and being wealthy.
Rich people make a lot of money. They spend it on unnecessary things and live lives of flashy indulgence.
But wealthy people save their money. They spend money on investments that will earn them compound interest and passive income, and they pass that wealth down through their families.
It’s important to understand that money doesn’t make you rich; many people have made a lot of money and gone on to lose it. Money is simply a tool that you can use to build wealth.
#6: Commit to Long-Term Investing
“The individual investor should act consistently as an investor and not as a speculator.”
Benjamin Graham
Benjamin Graham was one of the most influential investors and writers of the 20th century.
He is known as “the father of value investing” and is the author of the legendary book The Intelligent Investor.
Here, Graham is telling us that the market is at least somewhat efficient, and fundamental analysis will get you much further than technical analysis. (Read more about financial analysis in our article about Stock Market Terminology.)
You have to be prepared to look at the fundamentals of a company, such as its balance sheet and management, in order to make a profit.
If you try to “get rich quick” by acting on short-term patterns in price and trading volume, you will get burned more often than not.
#5: Know That the Market Is Irrational
“Every once in a while, the market does something so stupid it takes your breath away.”
Jim Cramer
Jim Cramer has made a name for himself as an eccentric but intelligent television personality as the host of Mad Money on CNBC. He is also a co-founder of TheStreet.com.
Jim knows that the market can be wildly irrational and unpredictable at times, so much that it can stop you in your tracks.
But the important thing about investing is to know that just because the market is acting crazily, doesn’t mean that the values of your investments has changed.
You have to stop yourself from letting the irrational market make you invest irrationally, and only switch up your investments when there has been a change in their fundamental values.
#4: Take Control Through Budgeting
“A budget is telling your money where to go instead of wondering where it went.”
Dave Ramsey
Dave Ramsey is known for helping people take control of their financial lives and pay down their debt using his Baby Steps plan.
He hosts the radio show The Ramsey Show where he gives advice on personal finance and takes calls from audience members that are struggling with debt and budgeting.
The above quote is textbook Dave Ramsey; you have to be in control of your money or it will control you.
If you don’t take the initiative necessary to make a budget so that you can reign in your spending habits, you will be left wondering why you don’t have any money and struggling to finance your own lifestyle.
If you want a platform to help you budget without all the extra work, check out Personal Capital. Personal Capital (now known as Empower) offers many free personal finance tools as well as a wealth management program, but the Budgeting tool is one of our favorite.
#3: Understand Risk vs. Reward
“Big companies have small moves, small companies have big moves.”
Peter Lynch
Peter Lynch is one of the most successful hedge fund managers of all time.
He managed Fidelity’s Magellan Fund for 13 years and more than doubled the S&P 500 on average.
This quote is a good example of the concept of risk vs. reward; bigger companies tend to be lower risk and their stock prices tend to make smaller moves, while smaller companies tend to be higher risk and their stock prices tend to make bigger moves.
#2: Diversify
“Don’t look for the needle in the haystack. Just buy the haystack!”
John Bogle
You know how we at Wall Street Survivor like to talk about index funds all the time?
You can thank John Bogle for that.
Bogle was the founder of Vanguard and the creator of the first-ever index fund, which is now known as the Vanguard 500 (VFINX).
Here, Bogle gives us an important lesson in diversification: you don’t have to stake your life on finding that one-of-a-kind investment investment opportunity that will make you a millionaire.
Instead, you can diversify your portfolio (or, in other words, buy the haystack) and increase your chances of having one or several investments that exceed expectations in a big way.
Not coincidentally, one of the best ways to diversify your portfolio is by investing in an index fund! We personally recommend Robinhood for getting started with index funds, as their commission-free investing platform has paved the way for investors with any amount of money to get started.
If you live outside of the United States, we recommend International Brokers. International Brokers is our #1 recommended broker for non-U.S. citizens due to the fact that they give their investors access to 135 financial markets in 33 different countries.
#1: Understand Price vs. Value
“It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”
Warren Buffett
Naturally, we had to save Warren Buffett for last.
The man, the myth, the legend himself.
Warren Buffett is a 91-year old investing legend as well as the chairman and CEO of Berkshire Hathaway Inc.
He is famous for his strict, textbook approach to fundamental investing through extensive research and understanding your investments.
While Buffett’s advice usually comes in the form of telling investors to buy great companies at a discounted price, this particular quote focuses more on the importance of passing up on poor investments, even if you think their stock price might shoot up.
It’s not worth it to invest in a company with poor fundamentals in the hope of a price jump.
Rather, you should find good investments at a discounted price, and like Buffett says, it’s better to buy a good company at a fair price than a poor company at a discounted price.
Remember, price is not equivalent to value, and a lower price does not mean you’re buying a valuable company.
Final Thoughts
No matter what type of saver, investor, or spender you are, you can thank the investing legends that came before us for paving the way and setting the groundwork for our paths to financial success.