5 Savvy Quotes About Investing

You can (and should) learn a lot about investing by reading great books on the subject — but you can also learn a lot from some concise words from great thinkers and investors: • Warren Buffett: “You don’t need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beats the guy with 130 IQ.” Common sense and the ability to resist acting out of fear or greed will go a long way toward helping you build wealth. You can outperform many Wall Street money managers just by hanging on to shares of an index fund for decades. • Peter Lynch: “All you need for a lifetime of successful investing is a few big winners, and the pluses from those will overwhelm the minuses from the stocks that don’t work out.” Mistakes and losses are inevitable, but some big winners can more than make up for them. • John Bogle: “If you have trouble imagining a 20 percent loss in the stock market, you shouldn’t be in stocks.” You should expect big market drops now and then. Ideally, aim to snap up shares of stocks “on sale” at those times. • Benjamin Graham: “The individual investor should act consistently as an investor and not as a speculator. This means ... that he should be able to justify every purchase he makes and each price he pays by impersonal, objective reasoning that satisfies him that he is getting more than his money’s worth for his purchase.” In other words, always invest rationally, thinking through all your decisions carefully. If you’re buying on whims and trading frequently without having researched your investments, you’re speculating. • Warren Buffett: “Wide diversification is only required when investors do not understand what they are doing.” If you’ve invested in many dozens of individual stocks, you’re spreading your money thin. It’s best to know your investments well and have your money parked in your 10 or 20 best ideas, not your top 100. If you’re not that comfortable, that’s OK — just opt for a broad-market index fund.