Last Updated on April 23, 2026 by teamtfl
“The most important investment you can make is in yourself.” – Warren Buffett
There is a question Warren Buffett has posed to investors for decades – and it exposes exactly how most people think about markets incorrectly.
“If you expect to be a net buyer of groceries for the next ten years, should you prefer higher or lower grocery prices?” The answer is obvious: lower. You want to buy more of what you need at cheaper prices.
Now apply this to investing. If you expect to be a net buyer of stocks for the next ten years, should you prefer higher or lower stock prices? Most investors say higher. This is the contradiction at the heart of most retail investing behaviour – and it is why most people underperform markets even when they are invested in them.
⚡ Quick Answer
Warren Buffett’s core investment philosophy is deceptively simple: own good businesses for long periods, stay rational when others are emotional, never pay more than a business is worth, and resist the instinct to be busy. His approach is accessible to any investor through index funds or diversified equity mutual funds. The principles are not complex. The challenge is psychological – staying patient when every instinct says to act.
The Principles That Actually Matter
Never depend on a single source of income. Buffett has always emphasised multiple income streams – but not in the “side hustle” sense. His point is about building investment income that works independently of your employment income. When you invest consistently, the compounding of returns creates a second income source that grows without additional work. This is the foundation of financial independence.
Don’t save what is left after spending; spend what is left after saving. This reversal of the typical savings behaviour is the single most powerful personal finance habit. Most Indians save whatever is left at the end of the month – which is often zero. Automated SIPs on salary date flip this: the investment happens first, and you live on what remains. Over a 20-year working career, this single habit change can mean the difference between retiring comfortably and retiring dependent.
If you buy things you don’t need, you will soon sell things you need. Consumption creep – the tendency to increase spending with every income increase – is the most common wealth destroyer in the Indian middle class. Each lifestyle upgrade feels deserved and reasonable at the time. The cumulative effect is a family that earns well but cannot retire on time because they spent everything they earned.
Beware of little expenses; a small leak can sink a large ship. Buffett’s framing of this was about small recurring costs – subscription fees, unused memberships, the premium coffee that is now Rs 250 daily. Rs 250 per day is Rs 7,500 per month or Rs 90,000 per year. Invested at 12% for 20 years: Rs 90 lakh. The small leak is not so small when you calculate its compounded cost.
Buffett’s principles are not about picking stocks. They are about thinking correctly about money.
RetireWise builds financial plans grounded in these principles – automated savings, goal-linked investing, expense discipline, and patience over performance-chasing.
On Risk and Uncertainty
Never test the depth of the river with both feet. This is Buffett’s principle on concentration risk. Your first investment should not be your entire savings. Your first business should not be funded with everything you have. Risk what you can afford to lose while learning, not everything you have accumulated.
In investment terms: never put all your money into a single stock, a single sector, or a single asset class. Diversification is not a hedge against good decisions – it is a hedge against the inevitable moments when even good decisions produce bad short-term outcomes.
Risk comes from not knowing what you’re doing. This is perhaps Buffett’s most misunderstood statement. Investors interpret it as permission to concentrate – “if I know a company well, I can put all my money in it.” Buffett’s deeper point is about the danger of investing in things you genuinely do not understand. If you cannot explain how a business makes money, how it competes, and why it will be worth more in ten years, you do not know enough to invest.
For most retail investors, this is an argument for index funds or diversified equity mutual funds managed by professionals – not for concentrated stock picking based on tips or trends.
On Patience and Behaviour
We simply attempt to be fearful when others are greedy, and greedy when others are fearful. This is the most quoted Buffett line and the least followed. During market corrections – when fear is at its peak – most retail investors sell. During bull markets – when greed is at its peak – they buy. This is the opposite of rational behaviour, and it is why investors consistently underperform the indices they are invested in.
The structure that allows you to be “greedy when others are fearful” is not courage in the moment. It is preparation before the moment: adequate emergency fund so you are not forced to sell, no margin loans, a written investment policy, and understanding of what you own and why you own it.
In the business world, the rearview mirror is always clearer than the windshield. Every market crash in history looks obvious in hindsight. The 2008 crisis, the March 2020 crash, the 2022 correction – after each one, experts explain precisely why it was predictable. Before each one, almost nobody predicted it correctly and consistently. This is the basis for avoiding market timing: the future is not as visible as the past. Stay invested, stay diversified, stay patient.
Read: The 4 Most Dangerous Words in Investing
Buffett’s investment success is not just about stock-picking genius. It is about 70+ years of applying the same rational principles consistently – saving first, owning good businesses, ignoring short-term noise, and letting compounding do the work. These principles are available to every investor.
It is not a numbers game. It is a mind game.
Which of Buffett’s principles are you currently applying – and which ones are you struggling with?
RetireWise builds financial plans that embed these principles structurally – not as aspirations, but as automated systems that run without requiring willpower.
Your Turn
Which of these principles has had the most impact on how you think about money? Or which one do you find hardest to follow in practice? Share in the comments.
These points are valuable…..thx 4 publish!!!
Mr Buffett is a great man who has decided to give all his earnings to charity, what you said about charity in terms of giving food to crows doesnt even count when compared to what he is doing . He is a self made billionaire and a very humble man who is a million times better than the ones in our country who just know how to take away the common people’s money and pile it up .
Our grandfathers have only taught us to invest in bank fd and lic policies and that is the way most of the Indian people have been investing for years now . Investment is not only for the young , if you cannot keep investing for a long time then invest for a year or two and then sell later may be after 10 or 12 years when the returns are good enough according to you . one thing about equity investment is right that the one who starts early earns more but still that should not stop you from investing . so invest whatever you can and who knows ..in the end you might win a honda at least if not a ferrari
I think you are wrong when you say that investment is only a young person’s game . Investment itself can be short term or long term , If one cannot invest for a long term then he/she should invest for a year or two and then wait for the investments to grow , this way you will win a honda atleast if not a ferrari .
Dear All,
Can any body suggests which Mutual Fund is doing better (interms of returns) for the last three years.
In the current market scenario, I find these Warren Buffett quotes very relevant:
In our view, it is folly to forego buying shares in an outstanding business whose long-term future is predictable, because of short-term worries about an economy or a stock market that we know to be unpredictable.
The future is never clear, and you pay a very high price in the stock market for a cheery consensus. Uncertainty is the friend of the buyer of long-term values.
Hi Hemant,
Have been following your website for quite some time now.
Found some your advice very useful.
I am a Software Engineer by profession. But though I do not work in the financial field, I am a fan; or rather devotee of Warren Buffett and am a practicing value investor; not on a large scale but I generally invest what I save each month.
I wanted to know if you have any provision for guest articles on your website? I had written a couple of articles on value investing which I have posted to my blog and would love to see them posted on your website; if you find them up to the mark.
If that is not possible, can I please have your permission to share my blogs links in this comments section.
Hi Pankaj,
You can mail your article to [email protected]
Hi Hemant,
Thanks for the update.
How does below work for a person with 9-6 [in reality its more of 9-9 these days] job?
“Earnings : Never depend on a single source of income.”
What sorts of investments can give you regular income especially when you have just started investing?
Nice article to set you into positive and inspiring mode.
I personally follow this one religiously and it has simplified my lifestyle:
“Savings : Don’t save what is left after spending; Spend what is left after saving.”
Excellent article Hemantji. Quite refreshing to read something totally different. I heard of Mr.Buffett couple of years back and read few books including The Intelligent Investor, full of gems.
Thanks for making this article interesting to read by Infographics, it’s fun and leaves an impact. One more thing he said when he donated to Bill and Melinda Gates foundation was that “You should give your kids enough that they do everything, not enough that they do nothing”. Lots of insights in his speeches and shareholder letters. Thanks for sharing.
Dear sameer, i am sorry to answer ur quiry adressed to hementji-but then i too wish to participate
congrats for being so informed & asking for the doubts-may i convey you my understanding of the things as perceived by me.
you have understood it well that business model & processes adhered & other allied things makes all the difference while picking the stock of particular co.
let me ellobrate that there may be no. of stocks in same type of sector & businesses-but what makes a difference is the way how businesses being run & the processes being followed & indeed transperncy in dealings & balance sheets.
precisely management of co. makes all the difference.
Hi hemant,
I really like the article. it is a very good article and thanks for wishing everyone to have a healthy financial life.
“If a business does well, the stock eventually follows.”
I started reading intelligent investor book. In that it is mentioned that if there is a boom in a particular sector it does not mean that all the stocks which comes under the sector will perform well.
here Business means refers to any particular secor. or their Business model adopeted by the company.
Pls clear the doubts.
Hi Hemant,
Kudos to u for uploading such a gr8 article…This just re-emphasizes the importance of time in the Market for novices like me….this encourages me to still go ahead with the SIP’s….& believe me, pple like me do need this reassurance…& its also ur articles tht r helping new investors ….thanks for the wonderful job u doing…
Thnks fr this articl.Plz advise me some of mutual funds that i invest and gain in short term
Hi Pabitra
All mutual fund investments are subject to market risk. You can expect gains in mutual funds only if you invest for a longer period.In the short term there is a possibility of losing money.For short term gains invest only in debt.
Here are a few good ones I have received by mail, not sure if they relate to what Warren says but nevertheless money and finance related,
Plan for the future, because that’s where you are going to spend the rest of your life,
The question isn’t at what age I want to retire, it’s at what income.
and the best one,
An investment in knowledge always pays the best interest.
SIP your way to a wealthy future and Hemant keep posting good articles like you have been doing, Thanks.
Hi Deepak,
This one is very good
“Plan for the future, because that’s where you are going to spend the rest of your life”
quotations sound great, impressive .especially for the early , young birds.
Should i be Optimistic- Late better than Never- with a very small tenure- 5-10 yrs. but not -Over 10yrs.
for those of us aged – 45+ laden with midlife crisis, with no Option for mid career shift.
Hi Gsreddy
Quotations are not meant for only young people.Moreover you must know that these are quotations of a person much older than you.Tenure of 10 years is not small.Ageing is the normal process of life.We should always be optimistic.
Hi Hemant Beniwal
I need Financial advisor. Can you help please.
Hi Maninder,
You can visit http://www.arkfp.in
as i understand, buffet is mostly advocating investment in good businesses for long term , and rather not in favour of mutual fund investments , as mf managers follow, rather , are forced to follow the market trends to show the performance in short term. whereas, you , if i am not wrong, favours mf investment v/s direct equity share investments. so some modified quotes are welcome from you, hament!
Hi Bharat/Vibhav,
If I am not wrong sometime back you mentioned that your family was in deep red when you were investing in direct equity. Then you moved to MF & now you are happy.
If you have again shifted to direct equity – just let me know 5 reasons that why you think you can generate better performance than a professional fund manager??
you remember correct, but i have not again shifted from mf to equity! and i am really happy with mutual funds. my portfolio is doing better than the indexes and the average of mfs. i think for india , mf is better than direct investment for a lay investor like me. so my request is serious.
I can explain few to make the people believe that Mfs are no less dangeorus to direct equity markets.
1. No ‘professional’ fund manager in India was able to judge the fall of SENSEX during and after 2007-2008. What happened to the IIM MBA degrees, decades of experience in finance sector etc that made them not to predict the fall. As per SEBI, there is a guidance how much should go for equity and debt. Anyone can list me just 10 funds which have effectively reduced the risk by reducing the equity exposure to debt during this tough times. The fundamental point which has been taught regarding the MFs for some time has flawed with the likes of current trends.
2. There is no one on the earth inlcuding Mr. Buffet who has not lost in the market. Winning or losing is a part of the game.
3. We have many AMCs and 1000s of funds literally. The selection of a good fund is as difficult as selecting a good company in a company. Most of the people are not taking their decisions on their own rather trying to find what is the best MF available on blogs, websites and then investing. Question them what are the companies that their MF is invested in – they would not be able to answer. Enough to say. Herd mentality is common anywhere.
4. When the NAV is down, we think it is normal for markets getting down for our MF. The same attitude we don’t show for the shares which we bought! Why? – Because we are living in a false finance security.
5. People are becoming happy looking at the positive results like 30% or 20% every year. What they are failing to understand is if the MFs can make them earn 30% they can earn even more than that by directly investing in a good company and the selection of this good company is not as difficulat as many are propagating. Of course, the websites, MF distributors have done enough good to increase the penetration for MFs also by scaring people.
5. I never heard/saw any person in my life saying that (s)he became rich by investing in mutual funds.
6. 99% of the people who enter into the equity market are the ones who think they can become rich overnight, who don’t even know the basics, who show the nerd mentality. The only reason why most people are osing the money.
7. There is no other asset than equity in India which can outperform in the long run anything else including the real estate.
8. All we need is a bit of common sense and a demat account. Enough.
One more:
9. Success should never be an accident. It must be an incident.
Thanks for the article, as the stocks are now in their lowest, I m going to buy as much as I can, or do I still go for a sip,what would be your advice on this?
Going for an SIP shall still make sense. Reason being, you are not sure how much the market will go down and for how long. So the rule of thumb still holds true, go for SIP to avoid timing, since we may still get it wrong.
Hi Punit/Tony,
SIP is a great way to invest but that doesn’t mean that it is the only way to invest. If you have some extra money that you may not need for 5-10 year – can be directly added at some point of time.
In simple words, We should not be bothered too much about the downfall in the market currently and should keep investing through SIP….as the fall in market will help us buy more units which will eventually help us gain more in future…
I hope I am correct 🙂
Hi Ramit,
You are on right track.
Thanks…
Credit goes to you for putting so much of helpful info for a rookie like me to understand it well !
Hi Ramit
Probably this is the time to invest more if you have cash.
They are real gems indeed.
Yes Rajiv,
As Jagbir said one can frame them 🙂
Hi Hemant
I am in agreement.
These are real treasure for an investor, should be framed and put on wall.
Adding few more:
* Wall Street is the only place where people who own Rolls Royce seek advice of the ones who travel to work by subway/local trains. – -Warren Buffet
* Dont chase the hot stock..because Stocks are manipulated to the highest point possible and then sold to the
public on the way down.
* “The idea of caring that someone is making money faster (than you are) is one of the deadly sins. Envy is a really stupid sin because it’s the only one you could never possibly have any fun at. There’s a lot of pain and no fun. Why would you want to get on that trolley?” -Charlie Munger
* Creating panic is the duty of operator becacuse he has been paid for that.
Stay calm, cool and having faith is the duty of investor becacuse nobody will
pay if you loose.
* If money is your hope for independence, you will never have it. The only real security that a man can have in this world is a reserve of knowledge, experience and ability.
* If you could tell the future from a Balance Sheet then accountants and mathematicians would be the richest people in the world.
– Jagbir
Hi Jagbir,
“The idea of caring that someone is making money faster (than you are) is one of the deadly sins. ” This happens in the bull market & we all know what happens after that.
Hi Hemant
Very true.
Hi Hemant
These are real gems.I particularly liked no 9 which should be inspiring for investors in the current situation.
9. Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it.
Hi Anil,
I loved this one “If you buy things you don’t need, you’ll soon sell things you need.”
Hi Hemant
All are very good.It is difficult to say which is the best.I feel like reading these again and again.