We know him as the “Oracle of Omaha,” and arguably one of the greatest investors of all time, but unlike every other billionaire financial wizard, Warren Buffett’s real superpower is saving as much as possible.
His penny pinching ways are well documented, but few people truly understand the real secret to his financial discipline.
With inflation rising and the S&P 500 trading at its highest valuation levels since the dot com bubble, Buffett is urging individual investors to diversify now. When one of history’s most successful investors is sounding the alarm on rising prices, it might be time to pay attention.
Here are three financially well-tested strategies for saving and spending like the Oracle himself.
Start a Roth IRA
Roth IRAs are an essential tool for growing your wealth. When you decide to dip into your Roth IRA funds, withdrawals are tax-free. If you’re retired and you need $40,000 for a new car the best way to avoid debt would be to use cash from your retirement account.
For example, you paid the $700 in taxes on that $6,000 and put it in a Roth IRA instead. Then assume you invest that sum for 40 years and earn an average 6% return. By age 65, you’d have turned that $6,000 into nearly $62,000, all of which could be withdrawn tax-free.
Putting that money away for retirement expenses will make a big difference down the road.
Dabble with Real Estate
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Putting money in real estate can be a great way to get steady income. Any allocation big or small can go a long way towards your first million. Of course, you could buy physical property yourself, but that can be costly.
A more affordable way is to invest in REITs. It’s like buying real estate except its a company that manages the company for you. They let you invest in all sorts of properties across the country, from office buildings in New York City to data storage centers in Arizona.
Adding some REITs to your investment portfolio could turn into dividends as prime time real estate becomes more scarce.
Invest in Million Dollar Paintings by Iconic Artists
The ultra-wealthy have invested in art for centuries—from the Rockefeller family, to Jeff Bezos and BIll Gates—all actively collect art.
In fact, billionaires, on average, allocate 10–30% of their overall portfolios to art with the goal of hedging against volatility. Art can come in handy when the market is in a frenzy, because art shares have the lowest correlation to equities of any major asset class, according to a 2020 report by Citi.
What’s more, Contemporary Art prices have appreciated 14% annually, on average. it’s still considerably better than the average returns of the S&P 500 at 9.5%.
With a new art investment platform recently valued at over $1 billion called Masterworks, you can invest in the very same types of multimillion-dollar paintings collected by the world’s richest.
Early investors already got a 32% net annualized return from the sale of Banksy’s ‘Mona Lisa’ last year, in the middle of the global health situation.
If you want to invest in possibly one of the most stable and reliable alternative investments without breaking the bank, you can request your invitation by clicking this link.
See important Masterworks disclosures.
