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Three investing legends you should take financial independence lessons from

While attaining financial independence can be a long, gruelling, and meticulous route, much like our actual struggle, we do have a few beacons of hope and inspiration we can learn a lot from. Read on to understand the legend of three of the most well-known investors of all time and what they teach us about being independent, money-wise.

August 10, 2021 / 10:52 PM IST

India is all set to celebrate its 75th Independence day in a few days. And we will rejoice in the glory of our tricolor and celebrate our hard-earned freedom and liberty to commemorate how far our country has come from being a war-ravaged British colony to becoming a global superpower in the times to come. 

Even though we have the privilege to enjoy our sovereignty, one aspect of independence still eludes most of us, and that’s gaining charge and control of our finances. While attaining financial independence can be a long, gruelling, and meticulous route, much like our actual struggle, we do have a few beacons of hope and inspiration we can learn a lot from. Read on to understand the legend of three of the most well-known investors of all time and what they teach us about being independent, money-wise. 

Warren Buffett

The Oracle of Omaha needs no introduction, for he perhaps, is almost synonymous with the world of investing. Equity investors around the world painstakingly hang on to each of his advice, and his firm Berkshire Hathaway has boasted of an impressive return generation record over the last few decades. 

Consider this; over the last few years (2015-2019), his firm managed to deliver an aggregate of 61 percent, substantially outperforming the benchmark S&P 500, which delivered around 56 percent during the same time. 

And while the Oracle has a stellar collection of quotes and insights about life, money, and everything in between, his first rule remains the king, which says “Rule No. 1: Never lose money and Rule No. 2: Never forget rule No.1.” 

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Your journey towards something as life-changing as financial independence will be full of twists, adversities, losses, but, much like your freedom, it is important to not lose sight of your objective and let market noise, random WhatsApp trade tips, quick, lucrative money-making schemes and lack of knowledge not come in your way. Patience, longevity, and perseverance pay off handsomely in the long run. 

And while we’re on the subject of lack of knowledge about finance, here’s another gem he has to offer. “One can best prepare themselves for the economic future by investing in your own education. If you study hard and learn at a young age, you will be in the best circumstances to secure your future”. 

So, don't give up on your personal learning and progress. Not now. Not ever. It's been 75 years and our country is still positively developing, learning and evolving for the better. We might as well jump on the bandwagon, shouldn't we? 

Benjamin Graham

The father of value investing, and the mentor of Warren Buffett, Graham, indeed is a man to learn a lot from. In one of his most prolific books, the Intelligent Investor, he introduces Mr. Market, who is an imaginary man being turning up every day at the shareholder’s office, offering to buy or sell his shares at different prices. It is up to the investors to decipher his changing colours, ranging between extremely rational and irrational, and make the best choice. 

Extremely passionate, aggressive, impulsive, and instinctive, that’s how youth is. Everything seems novel, fascinating and it's not hard to go astray and fall prey to misadventures, both in life and finance. 

We will find Mr. Markets everywhere, from random uncles insisting us to invest in a particular stock or various trade analysts and the market vociferously cheering for companies that might not be able to justify their sub-par performances in the long run. 

Don’t give in to these changing colours frequently. As Graham would suggest,  much like you believe in your worth, invest in companies that have the advantage of strong balance sheets, little debt, above-average profit margins, and ample cash flow.

If you follow a predetermined investment approach with an equity-aggressive strategy, given that you’re young and have time on your side, do not go for constant rebalancing to incorporate every new market trend. And seek help from people who can help you identify the menaces and traps of stock markets, as your financial planners and more. 

John C Bogle

A pioneer in the world of index investing, Bogle championed the low-cost, passively managed, diversified index funds, which became a popular route for many small investors over the years to gain exposure to the volatilities of the market. 

In his words, “The index fund is a most unlikely hero for the typical investor. It is no more (nor less) than a broadly diversified portfolio, typically run at rock-bottom costs, without the putative benefit of a brilliant, resourceful, and highly skilled portfolio manager. The index fund simply buys and holds the securities in a particular index, in proportion to their weight in the index. The concept is simplicity writ large.”

In a world where individuality runs amok, Bogle advocates for diversification and collectivism in order to achieve your goals. After all, thousands and thousands of people laid down their lives so that the Indian flag could be hoisted over a free, democratic country about to make its tryst with destiny on  August 15, 1947. Having a stellar team, a balanced portfolio with age-appropriate asset allocations instead of focusing on a singular asset class will do you wonders in the long run. 



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Ira Puranik
first published: Aug 10, 2021 10:52 pm
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