Warren Buffet’s net-worth is more than $ 160 billion. A smart-investor and beacon in the field, he believes that building wealth is a rather simple process only if one follows the right approach. Buffett highlights fundamental reasons why most people fail to accumulate wealth, offering valuable lessons for those seeking financial independence.

Lacking Patience for Long Term Investments

Rome wasn’t built in a day and so is wealth. Wealth-building requires slow and steady consistency with decades of patient investing. Buffet has famously held investment for years despite of an average investor checking stock prices multiple times a day.

Patient investing allows compounding capital gains and reinvesting dividends to work its magic. Due to excessive trading with no edge and no analysis, investors who have strategy and skill tend to earn more by buying and holding.

Waiting too long to start investing

“Someone’s sitting in the shade today because someone planted a tree a long time ago.” -Warren Buffett.

Being afraid of taking that first step towards investment will not build capital. Understanding the numerics behinds compound growth can carve out an a fruitful context for those who want to start investing early. Even if your paycheck is small, invest in SIPs and start at an early age to build your empire of wealth by the time you retire.

Having an emergency-fund gives investors a cushion in times of a market meltdown. The time advantage you create now, says Buffet, cannot replace clever investment strategies even in the late years of your career.

Being the crowd not a contrarian

The contrarian approach has been a major contributor to Buffet’s success. A $5 billion investment during the US market financial crisis of 2008 got him exponential returns. Data has repeatedly proven the average investor’s mindset of pouring money into mutual funds at market peaks and withdrawal at bottom. This is an emotional approach which ultimately make you a part of the crowd.

Emotional or impulsive purchases, by simply following fads, can also burn a hole in your pocket. Wealth is as much investment as a temperament because Warren Buffet sees market volatility as an opportunity and not a threat.

Placing price over value

Buffet suggests that buying assets simply because they are cheap is not wise. Buying diverse assets when their intrinsic value exceeds their market price has worked for the legendary investor. Gravitating his investment philosophy are also a simple investment strategy, sticking with discipline and not falling for short-term market fads.

Ignoring business fundamentals just to focus on stock price movement is futile without focussing on cash flow, competitive advantage and management integrity. Warren Buffet’s wisdom of wealth is not complex but requires discipline and understanding the properties of an ideal investor.

“The best investment you can make is in your abilities. Anything you can do to develop your abilities or business will likely be more productive.” -Warren Buffett.