Turning your initial investment into an astronomical figure takes less work and more of another quality, according to successful billionaire investor Warren Buffett.
A recent Motley Fool article
illustrated a Buffett strategy to show how an initial investment of $40 has grown into more than $10 million today. The article’s example: if you invested just $40 in Coca-Cola stock in 1919, it would be worth $10.8 million today.
The article acknowledges that $40 back then does not equal what it’s worth today, when factoring for inflation. Still, an ending balance of $10 million translates to a pretty hefty rate of return. One of the key strategies to making this type of return is being patient enough to let the money grow rather than reacting to the ups and downs that occur when investing.
The article also points out that it’s dangerous to try to time the market and predict what factors might affect stock prices. "With a wonderful business, you can figure out what will happen; you can't figure out when it will happen. You don't want to focus on when, you want to focus on what. If you're right about what, you don't have to worry about when," Buffett said.
As with stock investments, patience and strategy can pay off with alternative investments. Unlike stocks, however, alternatives can offer the investor a certain amount of control over the investment. Those who invest in stocks are defenseless against whatever factors influence stock prices and have no control. But if you invest in a single-family home, however, it’s more likely that you’ll be able to better research the investment before you make it, helping you better plan for any variables that arise in the investment plan.
Talk to an Equity Trust senior account executive about how you could use your retirement funds to take better control of your investments – sign up for a complimentary IRA checkup.