Warren Buffett’s 3 Simple Rules from “The Intelligent Investor” By Ben Graham (2024)

FAQs

What are the Warren Buffett's first 3 rules of investing money? ›

A: Five rules drawn from Warren Buffett's wisdom for potentially building wealth include investing for the long term, staying informed, maintaining a competitive advantage, focusing on quality, and managing risk.

Graham calls for a diversified portfolio divided between stocks and bonds, never going above 75% or below 25% for either. He refers to a 50:50 split with regular rebalance when it shifts to 55/45 in either direction.

Title: The Essence of Warren Buffett's Golden Rule: Never Lose Money.

The 3 Ps of investing: purpose, plan, and patience.

Warren Buffett once said, “The first rule of an investment is don't lose [money]. And the second rule of an investment is don't forget the first rule. And that's all the rules there are.”

Amount: Aim to save at least 15% of pre-tax income each year toward retirement. Account: Take advantage of 401(k)s, 403(b)s, HSAs, and IRAs for tax-deferred or tax-free growth potential. Asset mix: Investors with a longer investment horizon should have a significant, broadly diversified exposure to stocks.

A three-fund portfolio is an investment strategy that involves holding mutual funds or ETFs that invest in U.S. stocks, international stocks and bonds. The strategy is popular with followers of the late Vanguard founder John Bogle, who valued simplicity in investing and keeping investment costs low.

“The first rule of investment is don't lose. The second rule of investment is don't forget the first rule.” Buffett famously said the above in a television interview.

What are Warren Buffett's top ten rules for success? ›

A 70/30 portfolio is an investment portfolio where 70% of investment capital is allocated to stocks and 30% to fixed-income securities, primarily bonds.

Graham was a value investor and contrarian. He distrusted market valuations and growth projections. He preferred to value a stock himself based on the company's tangible assets, debt levels, earnings, and dividends. He would then limit his purchases to stocks that were priced near or (ideally) below his valuation.

The objective of Graham's strategy is to identify unappreciated stocks and show you how to find undervalued stocks that meet certain criteria for quality and quantity ... stocks that are poised for stellar price appreciation.

Graham Number Explained

This valuation metric considers two fundamental metrics: earnings per share (EPS) and book value per share (BVPS). By incorporating both earnings and asset value, the Graham Number aims to provide a more comprehensive estimate of a stock's intrinsic value than using either metric alone.

Warren Buffett once said, “The first rule of an investment is don't lose [money]. And the second rule of an investment is don't forget the first rule. And that's all the rules there are.”

Many real estate investors subscribe to the “100:10:3:1 rule” (or some variation of it): An investor must look at 100 properties to find 10 potential deals that can be profitable. From these 10 potential deals an investor will submit offers on 3. Of the 3 offers submitted, 1 will be accepted.

They are: (1) Use specialist products; (2) Diversify manager research risk; (3) Diversify investment styles; and, (4) Rebalance to asset mix policy. All boringly straightforward and logical.

It suggests that 10% of your portfolio should be allocated to high-risk, high-reward investments, 5% to medium-risk investments, and 3% to low-risk investments. By following this rule, you can spread your investment risk across different asset classes and investment types, such as stocks, bonds, real estate, and cash.