No one offers sage wisdom like Warren Buffett now, do they? The Oracle of Omaha has not just been a hugely successful investor but has also shared great insights on money over the years. Like this one: “If you don’t find a way to make money while you sleep, you will work until you die.” It hits home for me particularly when I think in terms of retirement planning. If I do not plan for it, I would have to work far longer than I wish to in order to keep my income going.
Making money through stock market investments
Keeping this in mind, I am now finding ways to make money while I sleep, to say it in Buffett’s words. Investing is one of the key ways of doing so. Whether it is investing in real estate or bonds or stocks, my goal is to make money from money. For me, stock-market investing has long been a profitable way of investing. So I am sticking with it.
Growth stocks to grow my capital
There are essentially two ways of making money through investing in the stock markets. One of them is through growth in my capital. I have to choose stocks carefully, though. There are plenty of stocks that have languished for years and could do so in the future as well.
So, I like to buy FTSE 100 and FTSE 250 stocks. Many of them have given solid returns over the years and could continue to do so in the future as well. I have made an odd investment or two in speculative stocks, but typically these are small investments. And I am certainly not depending on them to provide security of any kind now or in the future. I am, however, looking forward to growing my capital through the other stocks I hold, which have been far more predictable in the past.
Passive income is another option
Many of these FTSE 100 and FTSE 250 stocks also double up as lucrative passive income stocks. This means I get an opportunity not just to grow my capital but also dividends from them. If I can plough back these dividends back into my investments, it is even better. It makes for a virtuous cycle. I first invest my initial capital, which earns me a return, and it then gets reinvested to potentially earn me even bigger returns.
Parting Warren Buffett quote
Needless to say, there is always a risk that my investments could occasionally look like bad decisions. Like, for instance, during the stock market crash of 2020. For some time, the value of my investments was much lower than my initial invested capital. But such phases typically do not last, as we have seen. So, if anything, these are often times to make more investments, not shy away from them. To end with another of Warren Buffett’s quotes “Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble”.
