[The wisdom described below has worked for us. We use the same to run VinaDong Inc.]
The question one would ask is “how does Warren Buffett become so rich?” or “how did Arkad become the richest man in Babylon?”
First, save one-tenth of what you earn and dont touch it. Bob Proctor put it in another way: pay yourself everything you earn from 8am to 12pm on Monday. If you earn $1000 per month, put aside $100 for your saving. Use only $900 to pay for your expenses. The hardest part is to have discipline not to touch the $100 you save. The most important thing to remind yourself of if you are tempted to use your saving is that you will spend your future without return.
If you start with $100 and continue to put in $100 each month, with 5% interest, by 10th year you will end up with $15,662.10.
Fourth, guard your capital. Remember that getting rich is not a quick venture. You must be patient and not jump into any venture that causes you to lose your saving. Warren Buffett follows this principle by saying “the first rule of investing is to not lose money. The second rule is to never forget rule #1”.
It’s just as simple as described above. If you start with $100 and continue to put in $100 each month, with 5% interest, by 10th year you will end up with $15,662.10.
There’s a catch. You must be disciplined to religiously put $100 into saving every month without fail. You must find a way to invest your saving so that it can compound at 5% over 10 years. This is a compound interest of 5%. Buffett recommended index fund, which is historically very safe to earn above 5% return.
There’s another catch which I must give you in full. Arkad got rich, not only because of his saving habit, but also more importantly because he listened only to people with credibility and expertise. So in your endeavor to invest your saving, listen only to people you can fully trust and they really know what they tell you as well as they have track record to prove.
Watch out for advices from your friends, relatives, co-workers, or even strangers. Advice is too cheap. You will lose money if you do not know what you are doing.
Vinadong was founded on the principles of value investing as taught by Ben Graham, Warren Buffett, and Phil Fisher. The cornerstone of Vinadong is Margin of safety (buying a company for less than what it’s worth). We consider stock as a piece of business. Hence, when we buy into a company, we do enough researches to ensure that companies which we invest in work for us even in our sleep or when market is closed. The money they reinvest or the dividend they pay and we reinvest would be the children that continue to work for us. What leaves us to do is to save and control our expenses, which we have great disciplines to do so.
About the author: the post was written by Hoan Do, a certified leadership coach with John Maxwell Team. In addition to coaching and training on leadership subjects, Hoan is an investment expert. He studied in depth the method that Warren Buffett is using to build his empire and have been using the method described above along with Warren Buffett’s principles with enormous success. Hoan has one available spot for a qualified client.