Life Lessons I Learned from "The Oracle of Omaha"

Warren Buffet aka The Oracle of Omaha, is one of the most successful, wealthiest businessmen and investors of all time. Despite being one of the world's richest, he is modest, frugal, relatable, and full of humility – and his life story is an endless source of lessons on success and happiness. I have been a big fan of Warren Buffett for more than a decade now and I have benefitted hugely from following his wisdom and life skills apart from his investing lessons. So I have organized a few of his best life lessons for you to enjoy and learn from just as I have. 

1. "You only have to do very few things right in your life so long as you don't do too many things wrong." 

Do not make too many mistakes and you will be on the right track. Doing things wrong far outweighs doing things right. It is important to learn, be honest and make good decisions. I have avoided many mistakes in the last 10 years of life by staying within my circle of competence. I have learnt that I don't need to reinvent the wheel or be the smartest guy in the room. I just need to avoid the dumb mistakes. We need to work on your weaknesses, but the key is to leverage your strengths. Even in investing, the success belongs to those investors who consistently focus on doing a few things right and on avoiding big errors.

2. "It is better to hangout with people better than you. Pick out associates whose behavior is better than yours, and you will drift in that direction" 

Choosing the people you spend the majority of your time around is probably one of the most important decisions you can ever make. “Obviously, you can't pick your parents,” he says. “They're going to have an enormous influence on you. But you don't get a choice on that. But you get choices, as you go down the line. Who you admire, who you want to copy.” In order to surround myself with great people and be inspired, I read a lot of biographies and autobiographies. I wanted to improve my career, I found a mentor at my workplace. I wanted learn and expand my investment skills, I started networking with brilliant investors who have achieved decade-long successes and experience.

Research has shown that we humans are more affected by our environment than we think, so the five people closest to you will affect the way you are thinking, your self-esteem, and your decision making. Buffett has explained how to identify your peers. “You're looking for three things, generally, in a person: intelligence, energy, and integrity. And if they don't have the last one, don't even bother with the first two.” You are often defined by the company you keep, so choose who you hang out with wisely.

3. "If you buy things you do not need, soon you will have to sell things you need.”

One of the things I admire most about him is his ability to maintain a very basic lifestyle in spite of incredible wealth. Some of my key learning was to live below my means, invest early, don’t blow my money on fancy things and don’t willingly go into debt. Most of us are guilty of accumulating unnecessary stuff. Do you really need another pair of designer clothes or that expensive handbag or another latest gadget? I have fought the tendency to let my lifestyle increase as my income grew. Rather than spending more, I saved more, so that I would be financially independent sooner!

4. “The happiest people do not necessarily have the best things, They simply appreciate the things they have."

I enjoy my life and the things I have. I have avoided being concerned about what everyone else has or about what I could have. I always seek out things that I love and try to avoid wasting time on the rest. You can be just as content, even if you never amass a mega-fortune. Determine the things you enjoy most in life and aim to make the most of those things.

5. “Over time, compounding does amazing things.” Compound Interest is an Amazing Thing not just for money but for everything in life. Albert Einstein was once quoted, “Compound interest in the 8th wonder of the world. He who understands it, earns it…he who doesn’t…pays it.” It’s amazing to see just how powerful this principle is. When asked once about the key to his success, Buffett pointed to a stack of books and said "Read 500 pages like this every day. That’s how knowledge works. It builds up, like compound interest. All of you can do it, but I guarantee not many of you will do it." Of course reading 500 pages a day is not feasible for me. However, I have found out ways to read (or listen to an audiobook) while driving for work, while taking a morning walk and on the weekends, and I have seen it be very beneficial.

6."It takes 20 years to build a reputation and five minutes to ruin it. If you think about that , you will do things differently"

It takes years to build success but you can lose anything in an instant. And in the social media dominated world, one's good reputation can be tarnished very quickly.  So, before taking any action, I always look at the issue from a reputation angle.

7."Chain of habit are too light to be felt until they are too heavy to be broken" 

Habits- they are start out small, then grow and then you are hooked.  Once they are part of your life, they are extremely difficult to get rid of. The trouble is that most of us do not see it coming. They starts so small, and they can go unnoticed until they are too strong to be broken.

8. "There comes the time when you ought to start doing what you want. Take a job that you love. You will jump out of bed in the morning. I think you are out of your mind if you keep taking jobs that you don’t like because you think it will look good on your resume.”

He lives by a rule that success comes when you do what you love and urges us all to live by it too. When you do what you love and are passionate about it, you’ll never work a day in your life. I have always worked on projects & assignments that I love being part of in my workplace. I love investing and that is why I am enjoying doing what I am doing now. Doing what you derive passion from cannot be over emphasised.

9. “As you move along in your career, you always want to consider your inner scorecard that is how you feel about your own performance and success. You should worry more about how well you perform rather than how well the rest of the world perceives your performance.”

We need to be able to judge ourselves on how well we are performing against our own success and failures. I have an inner compass that measures how well I have been doing over my past performance. If I fail, I take responsibility for that failure and don’t blame anyone else for that. Learn what I did wrong and be proactive to correct that mistake.

10. “The most important investment you can make is in yourself.”

The most important investment you can ever make is not in Nifty, Sensex, Real Estate etc, It is on yourself. I have been investing 5% of what I earn into self improvement and trying to better myself by spending money on upgrading my education, buying books, attending seminars etc. What surprises me is that most people would spend Rs 15,000 or more in buying the latest mobile phone, but they won't invest even Rs. 150 on a book which has a potential to change their lives.

11. “If you don’t find a way to make money while you sleep, you will work until you die.”

Most people I have come across live life without realizing the situation of their current finances and the future outlook based on their current circumstances. The biggest learning I had very early in my career was to save, invest smart, and build an income stream that makes money regardless of whether I work. Everyone needs to find ways for income to continue coming in, even when you are not actively working - passive income. The way you will build your passive income will truly depends on your interests and the time you are willing to dedicate towards building passive income.

And finally the most of important lesson I learned from him was "It is okay to dream big"... No goal is too large or challenging if you have the resolve to put it to work. Believe in yourself, and you can make anything happen.

Mohnish Pabrai once said: “I believe the best things about Warren have nothing to do with investing, but they have everything to do with leading a great life.” And I couldn't agree more.

(*all quotes are from Warren Buffett)