6 tips to protect your finances from Warren Buffett
Updated: Jan 14, 2022
COVID-19 and the resulting recession have affected everyone, including 90-year-old investing legend Warren Buffett.
His huge conglomerate Berkshire Hathaway Inc. The pandemic “has negatively impacted almost all of our operations, although the impact has varied significantly,” the company said in its most recent quarterly earnings report in early November 2020. But even with the troubles, Berkshire reported an 82% jump in net profit for the July to September 2020 quarter. So billionaire Buffett seems to be handling the crisis well.
You can too if you follow his example. Here are the takeaways from Buffett's six wise deeds to help protect your money while the virus continues to rage.
1. Use low-interest rates
Buffett has become one of the richest people on the planet by taking advantage of the opportunities that have opened up. During the pandemic, he pointed to fantastic opportunities for borrowers thanks to the Federal Reserve's response to the COVID crisis. The Fed "did the right thing" by cutting its key interest rate to near zero in response to the virus, Buffett said. Other rates fell like dominoes across the economy.
“This is a very good time to borrow money, which means that now is not the best time for loans, but it’s good for the country that now is a good time to borrow money,” he said during the last meeting of Berkshire shareholders. Hathaway in May 2020.
How You Can Be Like Buffett: If you're a home buyer or homeowner with a solid credit rating, pick one of today's ultra-low mortgage rates while you can.
2. Be vigilant
It's not for nothing that a native of Nebraska, Buffett is called the Oracle of Omaha. Last March, the multibillionaire told an interviewer, "I always felt like there would be a pandemic someday."
In 2019, he warned his Berkshire shareholders in a letter that the world was facing a "mega disaster," a kind of "complete surprise" that would overshadow the devastation from Hurricanes Katrina and Michael.
Buffett wrote that the monster disaster would result in huge losses for his company, but Berkshire will be ready to go the next day, he said.
How you can be like Buffett: You, too, can be prepared for anything - by buying life insurance to provide financial protection for your loved ones. Sales of policies for family breadwinners have surged due to deaths from COVID. You can easily go online and find several life insurance offers tailored to your family's needs.
3. Don't store balances on your credit card.
As layoffs soared during the pandemic, some Americans were forced to accumulate more credit card debt. Turning to credit cards due to financial hardship is one thing, but Buffett says some people use plastic as a "money-box for raiding."
During a virtual meeting of shareholders, he spoke about a friend who got into an unexpected situation and asked for advice on what to do about it. She had a credit card debt - at 18% per annum.
“If I owed money at 18%, the first thing I would do with the money I have is pay it back,” Buffett told her. "You can't live your whole life borrowing money at these rates."
How can you be like Buffett: When credit card debt gets unbearable, the first step to getting rid of it is turning it into a debt consolidation loan. You will simplify your bills and cut interest expenses to pay off debt faster. Instead of 18%, you can pay only 5.95% per annum in the USA.
4. Do your homework with stocks.
The coronavirus crisis is devastating entire industries, including retail, dining and entertainment. Buffett decided that the damage to one particular industry would be greater than he could bear as an investor.
“The aviation business - and I could be wrong and I hope I am wrong - has changed a lot,” he told his shareholders.
So he explained why Berkshire sold all of its airline shares.
Buffett says people were discouraged from flying, so "the world has changed for airlines."
How can you be like Buffett: Investors who did their homework were rewarded during the pandemic as the stock market climbed to new all-time highs. Several stock investment portfolios will help you make the right choice. One solution will allow you to invest extra money in a portfolio that automatically adjusts to the ups and downs of the market.
5. Stick to a long-term plan.
Warren Buffett is confident that the US economy will recover from the COVID-related recession.
“Basically, nothing can stop America,” he said during an online meeting. “In fact, we have not encountered anything that closely resembles this problem, but we faced more serious problems. American miracle, American magic has always prevailed, and it will repeat itself again. "
But Buffett also said that no one knows what will happen, so investors should brace for a potentially long recovery. He says they will get "good results" if they hold the stock in the long run.
How You Can Be Like Buffett: Financial planning services are more affordable and convenient than you think, and can help you focus on your investments. Today you can discuss the path to your long-term goals with a financial planner at a financial consultation.
6. Ask for help if you need it.
Buffett says the coronavirus has plunged the US into an "economic war," and many small businesses have fallen victim. He called on Congress to provide additional assistance.
“We have stopped a lot of people in this particular provoked recession and others are thriving, and I think the country owes these really millions of small entrepreneurs,” Buffett told CNBC in December.
The COVID-19 rescue package, approved in late December, included $284 billion in new small business loans with "paycheck protection." Now President Joe Biden wants to provide $15 billion in grants to more than 1 million hard-hit businesses.
How you can be like Buffett: If you are a business owner or breadwinner with financial difficulties, look for sources of relief - and take advantage of what is around.
This means, for example, that if you have federal student loan arrears in the United States, do not make payments until October, when the government moratorium is scheduled to end. Private loans can be refinanced at today's sharply lower interest rates.