Best Investing Advice – Words of Wisdom on Money
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All successful investors have a set of rules they abide by, and many likely arrived at those rules through trial and error. The ability to recognize and learn from their mistakes is the hallmark of a successful investor. Putting your money to work is essential to generating long-term wealth, but markets can come off as cold and hard to beginners.
Making money in the stock market comes by following an investment strategy, but it's best to seek advice if you're feeling confused about investing. And who better to turn to than famously successful investors? After all, they have decades of experience behind them, have seen the markets up close and personal, and well, a few of them are very quotable.
Of course, not all of this investment advice will apply to your specific situation, but you could ask yourself if you're overlooking something that could be done differently.
Related: What to Look for When Buying Stock
In this article
Best investing advice
On the stock market
Be "fearful when others are greedy, and greedy when others are fearful," Warren Buffett.
This is a paraphrased quote immortalized by Buffett in his 1986 annual letter to shareholders. He's written these letters each year, and legions of investors – novice and professionals – pore over them for words of wisdom by the Oracle of Omaha. If you pay too much for a stock and its price reflects the business' actual value after a correction, your returns will erode. Conversely, if the stock price falls due to a short-term headwind, it may present an attractive entry point. Buffett is telling investors to be cautious of overpaying for a hot stock (remember Gamestop?) lacking fundamentals that may lead to lackluster returns.
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On diversification
"Do you really like a particular stock? Put 10% or so of your portfolio on it. Make the idea count. Good ideas should not be diversified away into meaningless oblivion," Bill Gross, co-founder of PIMCO.
Gross, also known as the "Bond King," managed PIMCO's Total Return Fund until leaving in 2014. Not putting all of your eggs in one basket (portfolio diversification) is a much-discussed topic in the investing world, and its important to make sure a stock that goes sour doesn't affect the portfolio as a whole. But you could be looking at lower returns if one of the stocks goes on a bull run while others remain muted. It's a good idea to have some cash on tap, so when your research points to a winner, you can act and maximize your returns.
On cryptocurrency
Nothing divides the investor community like cryptocurrency. Some see it as an established asset class-bound for great things, while others have called it a "worthless" bubble and "fool's gold."
"Cryptocurrency is promising, but please invest with caution," Tesla chief Elon Musk.
Musk tweeted this in May 2021, and his comment encapsulates the whole crypto industry, which is rampant with scams. Musk has become one of the most prominent voices in the crypto world. He often uses Twitter to post about various coins, which causes massive swings in their prices. Reuters has an exhaustive list of his crypto-focused tweets. At one point, Tesla also accepted bitcoin as payment, but it was shelved later over the energy-intensive process required to mine bitcoin, which goes against Tesla's sustainability focus.
On debt
"Never spend your money before you have it," Thomas Jefferson, third President of the United States.
Credit cards didn't exist in the Founding Fathers' time, but debt was still very much prevalent. In today's margin trading and leverage world, these comments hold true more than 100 years later. Using leverage to invest isn't unheard of, but it comes with pitfalls. If things go awry, you could not only lose all of your initial investment, but in some cases, you may end up owing more than you invested.
On your comfort zone
"In investing, what is comfortable is rarely profitable," Robert Arnott, chairman of asset management company Research Affiliates.
In order to earn a high return on your investment, you may have to come out of your comfort zone. It's easy to get carried away with what works in the investing world. And why not? After all, it's where you feel like a superhero. But that mindset may rob you of realizing significant gains elsewhere solely because you weren't comfortable trying something new. Getting out of this bubble-wrapped haven just might be where you unlock your true potential.
On risk
"The biggest risk of all is not taking one," Mellody Hobson, co-CEO of Ariel Investments.
News flash: All investments carry risk. The right cocktail of market conditions might wipe out your investment capital in its entirety. The level of risk associated with an investment correlates with the level of return the investment might achieve. So, the more risk you're willing to take on, the more you could potentially make on an investment. But many investors are risk-averse and choose only to put money to work in safe, typically low-yield investments: We're hard-wired to avoid losses. Instead of avoiding risks, it's best to work out a sensible action plan and control the outcome.
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- Averaged Stock Pick Return over 593% (vs. 165% for the S&P)
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- 30-Day Membership-Fee-Back Guarantee
- Joy Wallet Reader Deal: The Motley Fool is offering 50% off its top stock-picking service for new members (Limited Time)
Best stock picking services
We get it: Stock research is not easy. You have to analyze market data for individual stocks, pore over research reports by sell-side firms, and conduct investment research. It takes time and patience. But investment newsletters can be a powerful weapon in your personal finance arsenal, and they make it a breeze to choose the best stock. A long-term investing strategy where you buy and hold a stock for 5 to 10 years will provide the highest returns.
The Motley Fool Stock Advisor
Born out of a desire to democratize investing, brothers David and Tom Gardner founded Motley Fool in 1993. Stock Advisor is arguably their most-famous service with an impeccable track record, having beaten the S&P 500 four-to-one over the last 19 years. The service recommends large-cap stocks with long-term profitability. Your subscription gives access to new stock picks each month, best buys now (five stocks that are a must-buy for long-term performance), starter stocks (10 rock-solid stocks to help you build your portfolio), and a host of other features. It costs $99 a year for new members and $199 when you renew.
Seeking Alpha
Seeking Alpha is a suite of products providing fundamental analysis, trending financial news, and investing insights aimed at intermediate to advanced investors. But stock recommendations and investment research isn't even the best part. That would be the stock screener tool, which lets you filter stocks and create targeted investing plans. However, to access that, you'll have to pay $199 per month for the Pro subscription.
Zacks
A big name in the stock investing research space since its launch in 1978, Zacks' ranking system has more than doubled the S&P 500 with an average gain of 25.37% per year for the last 25 years. Perhaps, its best-known feature is Bull and Bear of the Day. The company selects one stock you should buy and one you should sell. You can add these to a watchlist if they fit your investing style. Zacks also has a Fund Newsletter highlighting the best ETFs and mutual funds to invest in. Its basic version costs $249 per year, and the pricey premium tier will set you back $495 annually.
Read a full review on Zacks.
Use Motley Fool's Stock Advisor To Invest
- Over 100 Stock Picks with 100%+ Returns
- Averaged Stock Pick Return over 593% (vs. 165% for the S&P)
- 2 New Stock Picks Every Month
- Investment Community With 700,000+ Loyal Members
- 30-Day Membership-Fee-Back Guarantee
- Joy Wallet Reader Deal: The Motley Fool is offering 50% off its top stock-picking service for new members (Limited Time)
The bottom line
Investment advice comes aplenty. From so-called investment gurus on social media touting hot stocks to strangers telling you which crypto will go up in value next, there's no shortage of investment advice out there. But there's no single piece of advice that's applicable to everyone, but if you're looking to get inspired, always turn to the pros.
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Writer
Jasir Jawaid is Joy Wallet's Assistant Editor. He has more than 13 years of experience as a journalist covering Wall Street, equities, financial policy and regulation, and cryptocurrency and blockchain.
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