Warren Buffett isn’t just the best investor of our generation: he’s a man that can help you get on the road to a wealthy retirement. There are many ways to get rich in markets. You could take a page out of the Oracle (NYSE:ORCL) of Omaha’s playbook by staying patient and investing wisely over the decades, doubling down on market crashes that bring forth the greatest rewards, or you could chase “sexy” momentum plays, like most other beginner investors have been doing these days.
The latter scenario makes for great watercooler conversations. The former? Not so much.
With all the chatter about people getting rich off Bitcoin, meme stocks like GameStop (NYSE:GME), celebrity SPACs, and oversubscribed Initial Public Offerings (IPOs), it’s tough not to get pulled in by the siren song of quick and easy riches. People have made big money. Why can’t you? It’s pretty painful to be the lone person at the watercooler who hasn’t made money on speculative frenzies.
Warren Buffett and Charlie Munger didn’t chase frenzies Let’s face it. It’s just fun to speculate and chase momentum plays like Bitcoin, or marijuana stocks, even though the risks may be on the higher end. It’s even more fun to make the big-league hedge funds feel the pain with WallStreetBets short squeezes, as confetti falls in your commission-free trading app, while your buddies at Reddit cheer you on! The euphoria could not be greater!
But one must be careful when basing their investments on opportunities that are “fun.” Investing can be fun, but it shouldn’t be too fun, and you certainly shouldn’t put yourself in a spot to lose your shirt, even if it means gaining karma from your peers on Reddit’s WallStreetBets forum. There’s a fine line between investment and speculation or gambling. And it’s vital that investors understand where the line is so they can preserve the wealth that they’re not willing to part with.
This market frenzy will end in due time Warren Buffett couldn’t care less about the market frenzy or sideshow that’s going on right now in certain asset classes. Charlie Munger sounds a tad irritated over the numerous bubbles floating around this market, and he wants no part in the speculation. He knows it will not end well. Both Buffett and Munger have been through their fair share of frenzies, and it’s their resistance to the siren song of quick riches that have made both men profoundly wealthy.
The race to a rich retirement is a race that’s won by the tortoise, not the hare. Both Warren Buffett and Charlie Munger know that long-term investment success is as much about preserving wealth as it is about growing it. And both men would gladly reach to a cheap dividend stock if it means obtaining a solid risk/reward over the next 10 years, even if the chances of getting rich over the near-term are next to nil.
An unsexy stock in an era where only sexy plays will do Today, Fortis (TSX:FTS)(NYSE:FTS) is one such dividend stock that I believe beginner investors would be best-served owning, not the “sexy” plays that could stand to crumble like a paper bag, without so much as a reason for doing so. With Fortis, what you see is what you’ll get: a 4% dividend yield with 5-6% in annualized dividend growth. In an era of profound uncertainty, with much neglect for the valuation process, I believe Fortis stock ought to be seen as a far sexier play than Bitcoin, Tesla, or any other “sexy” play of the day.
Sure, it’ll be painful to hold Fortis and its relatively modest dividend while everyone gets rich off Bitcoin. Just ask Warren Buffett. But once bubbles burst and focus returns on long-term investment, you’ll be so glad that you took the route of the tortoise and not the hare, which will have to be taken right back to the starting line.
Stay in the game. Invest, don’t speculate. And you’re likely to reach a rich retirement.
The post Warren Buffett: Avoid This Mistake and You’ll Be Well on Your Way to Retiring Rich appeared first on The Motley Fool Canada.
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