Warren Buffett’s winning investment strategy can be applied to every purchase you make

Warren Buffett knows a thing or two about choosing worthwhile investments.

When deciding whether or not to invest in a company, he and his partners follow a few simple guidelines. One of those is trying to determine the company’s longevity.

“We sort of know it when we see it,” Buffett said during the the Berkshire Hathaway 2017 Annual Shareholders Meeting. “It would tend to be a business that for one reason or another we can look out five or 10 or 20 years, and decide that the competitive advantage that it had at the present would last over that period.”

Warren Buffett knows a thing or two about choosing worthwhile investments.

When deciding whether or not to invest in a company, he and his partners follow a few simple guidelines. One of those is trying to determine the company’s longevity.

“We sort of know it when we see it,” Buffett said during the the Berkshire Hathaway 2017 Annual Shareholders Meeting. “It would tend to be a business that for one reason or another we can look out five or 10 or 20 years, and decide that the competitive advantage that it had at the present would last over that period.”

Simply put, Buffett decides a business is worth investing in because it will last.

“His approach is to be really sure of something before he buys it, and one of the ways he exercises that discipline is to sort of almost never sell. Not never sell, because he does sell stocks, but he sort of says to himself, ‘I know I’m almost never going to sell it, I’ve really got to like it before I get into it,” Buffett’s biographer Roger Lowenstein, author of “Buffett: The Making of an American Capitalist”.

While not everyone will garner the same results as Buffett on the stock market, his core principle can be applied to almost every purchase we make: Invest for the long-term.

When deciding whether or not to buy a home, one of the first questions to ask yourself is: How long do I plan on staying here? The longer you live there, usually, the more valuable an investment real estate becomes.

The same goes for clothing, appliances, furniture and anything else that you use on a daily basis. While it’s tempting to skimp on the cheapest option in the moment — especially if you’re on a tight budget — over time, nicer items will hold up better, making the initial outlay worth it.

Whether you’re shopping for a new pair of jeans or in the market for a new car, apply the Buffett rule to your next purchase: Is this something worth holding onto?

Source: Bloomberg

Jr Trader Ivan Ivanov