The economy, although better than in previous years, is still not stable. No one wants to predict what we can expect or how to invest, but the billionaires and millionaires of today definitely have their preferences.
We’re about to reveal investment tips from some of the wealthiest men in the world, however, we are not suggesting that you run out and try them. What you’ll find interesting is that these pundits have quite a variety of solid strategies up their sleeves, so there is something for every type of investor.
Our financial tips for the day: Never invest what you don’t have on any get-rich-quick schemes or anything, for that matter. Buy low, sell high. Don’t live above your means and you will then have that extra money to invest. Those are the tidbits we’ve picked up along the way, now check out what the experts are saying.
10. Warren Buffett’s Tip – Invest in undervalued companies that can provide cash flow. Instant asset.
The man who barely uses a computer, rarely has a driver and lives in the same home with no luxury collections or yachts, continues to bring it in with his impeccable judgement. He is considered a value investor – one who finds undervalued companies (25% below value) that meet other criteria, such as: overall potential, debt, profit margin, holdings and competitive advantage. Those are quite a few points to analyze, however Buffett has an innate skill that has proven his success is not from luck.
One of the key ideas Buffett tries to relay to others is not to buy a liability; but instead buy an asset. An example would be car buying. Don’t buy a brand new car that will lose its value as it is driven off the lot and comes with car payments that tie up your money. Instead, buy a brand and model that is slightly used but will retain its value longer than others. His investments are all assets, if you take a closer look. Smart man.
9. Seth Klarman – Reduce margin of error
In case you are not familiar with Seth Klarman, he is a billionaire who made his money through a Boston-based private investment partnership; the Baupost Group. A graduate of Cornell and Harvard Business School, he worked for Max Heine and Michael Price of the Mutual Shares fund. He is also the author of Margin of Safety: Rise-Averse Investing Strategies for the Thoughtful Investor (1991).
Evidently, Seth was one of the highest-earning hedge fund managers in 2013. He hates losing money as much as he enjoys making money, so his patience for waiting for the right investment is high. He has been known to wait years, therefore, he makes sure he has enough cash-on-hand to go after an opportunity, should it arise. His best investment tip is to reduce your margin of error by buying companies or stock in companies that are not likely to decline in value. He tends to look for underdogs or undervalued.
8. Ray Dalio – Ignore experts and do your own thinking
Harvard grad Ray Dalio is the well-known founder of the investment firm Bridgewater Associates, which is the world’s largest hedge fund with $150 billion assets under management. He is also known for having a very strong understanding of market cycles. “I think we go so quickly thinking ‘where does the economy go next’ instead of thinking how it works.” In fact, Dalio released a video on how the world’s money works and how things like recessions, depressions and boom years happen. His projection for the year is, “We won’t boom, we won’t bust.”
He cites that the United States is in the middle of a post-recession short term debt cycle where assets will return about 4%. Dalio states, “If I could say one thing to your investors, it’s try to achieve balance. As an investor you need to diversify your portfolio and understand that in the type of world we’re living in, your returns are going to look like this: 1% cash, 3% bonds, 4% on equities.”
7. Paul Tudor Jones – Follow the secrets behind successful hedge fund billionaires
Founder of Tudor Investment Corporation, a private asset management company and hedge fund, Paul is known for being one of the most successful traders ever. He started working in the investment business in 1976 and wound up a successful cotton trader. When he started Tudor Investment Corp. he was 26-years old. He was one of the few who managed to successfully short the 1987 stock market crash. Jones tends to make astronomical amounts on market-shaking events and even when that isn’t happening, he is quick to make or change investments without delay. He strongly feels that if investors examine the strengths and secrets of hedge fund billionaires, such as T. Boone Pickens, David Tepper and Bill Ackman, they would see the way to the yellow-brick road.
6. Mark Cuban – Seize opportunities
Mark Cuban is the owner of the National Basketball Association’s Dallas Mavericks, Magnolia Pictures, Landmark Theaters, a star on Shark Tank and an excellent investor, as one can see by the way he makes decisions on the hit television show. His investment tips start with paying off debts and creating a real budget. Secondly, he believes in keeping cash handy even if the interest rate is low. This is about being able to seize opportunities that come up. “I thoroughly encourage people who have their retirement plans taken care of, are free of debt, and still spend less than they earn to take the excess and hold it in an “opportunity” account.”
5. Eli Broad – Don’t bet the farm
Eli Broad is a self-made billionaire and did it by making some very wise investments. He is #207 on Forbes list of billionaires. He recently spent about $140 million on the Los Angeles art museum that was set to open this year, but it was announced the opening will be pushed to 2015. He bought his first property when he was 20-years old and went on to co-found Kaufman & Broad in 1957 and the company later became one of the home building giants in the U.S.
He is also known for buying Sun Life Insurance in 1971 and then selling it to AIG for $18 billion. The man is sitting on money that he is now giving away. To date, he has donated over $3.5 billion. His investment strategies include not betting away everything you have and invest in high-quality multinational consumer companies like Procter & Gamble and Johnson & Johnson.
4. Patrick Soon-Shiong – Don’t lose money
Soon-Shiong co-founded Vivo RX Pharmaceuticals and co-developed the breast cancer treatment, Abraxane. He now owns a minority share in the L.A. Lakers, as well as ownership in over 30 other companies. His financial acumen started when he was told to “invest in yourself and the people you believe in”. He took the advice and the rest is history. He suggests investors stay away from gold. He also gives the most simple, but great advice, of making sure to keep your money safe and not lose it.
3. Menin Teixeira de Souza – Below par Brazilian investment-grade bonds
This billionaire made his money building homes for low-income Brazilian families. The company, MRV Engenharia & Participacoes SA, became the country’s fifth-largest home builder in the 70’s. To this day, he owns 32% of the company. He gets excited when he thinks about how he bought Brazilian C bonds in the 90’s. Evidently, a few years later the government bought back the bonds that were purchased for 40 cents on the dollar – an immediate asset. Teixeira de Souza states he watches the S&P 500 and the value of the U.S. dollar as his two primary financial indicators.
2. John Paul DeJoria – A four-part plan that pays
Co-founder of Paul Mitchell, John Paul has been a huge success with his hair salon product empire. Did you know he also founded The Patron Spirits company? If you’re a tequila lover, you’re familiar with the high quality brand that was introduced in 1989 and now known around the world as one of the finest. This business moguls’ advice has heart as much as solid strategic thinking, as he is a philanthropist and humanitarian. Here are his thoughts on how he would invest one million dollars: 25% in gold, 25% in silver, 25% in NYSE blue-chip stocks that pay dividends, 25% between Asian and European blue chips that pay dividends.
1. Donald Trump – Equities and Bonds
Everyone knows the Donald was brought up in a wealthy family. However, lots of people are and still don’t have the financial savvy that this man has demonstrated throughout his career. It helps that his father taught him everything he knew about the real estate business, but it still takes a smart person to know how to use the information. He took what he learned and used it to create even greater wealth. We applaud that and are ready to listen to whatever he has to say. According to what we’ve researched, Donald Trump believes the best investment choices are equities and corporate bonds. He also suggests purchasing foreclosed homes from banks, if you know how to demand good interest rates and long-term financing so the leverage is using all possible advantages.
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