Lessons from Berkshire Hathaway – Build a business and invest in stocks to grow wealth faster

Berkshire Hathaway meetingAs today is the 6th of May it is one of my favourite days of the year. This is because the 2017 Berkshire Hathaway Annual Shareholders meeting will be held in Omaha, Nebraska at the Centurylink Center. Thousands of diligent investors will turn up to witness Warren Buffet speak and as always, the Oracle will provide long lasting insightful financial advice suitable for all.

This year’s meeting will be webcast live on Yahoo.

Listening to Buffett has made me realise that it is possible to emulate his great success by using a two pronged approach for generating wealth through carrying out business activities and concurrently investing in the stock market. Such an approach, where excess profits from business activities are reinvested in stock investments will certainly supercharge cash generation and enable the investor to achieve their goals more effectively.

Run a real business

According to Buffett, Berkshire prefers to wholly own businesses such as BNSF, See’s Candies and Geico to common stock investments for a number of reasons. Running a business does not necessarily mean being heavily involved and spending many hours working on the venture. Cash can be generated by side hustle activities such as Amazon FBA, eBay, AirBnB, rental properties, Etsy, selling Private Label products, blogging or producing online products. Find your niche and apply your skills at what you enjoy doing and are good at.

Invest in stock index funds

The top five common stock investments in Berkshire’s portfolio are the American Express Company, Apple Inc., Charter Communications Inc., The Coca Cola Company and Delta Airlines. You can build your own portfolio of high quality company stocks by investing in low cost index funds.

Initially, business profits can be reinvested in the business to expand your offering and to get established in your chosen space. Later the profits can be invested in stocks to offer diversification of your overall holdings while providing truly passive income. I believe that a dollar of passive income is worth at least two of active income.

Avoid analysis paralysis and take action

The important thing is to not overthink your business or investing ideas. Instead, make a plan and execute it in the most effective way possible. Delays in getting started can lead to huge opportunity costs in the long run or worse, not doing anything at all. You can start by testing the waters through minor investments and then increasing involvement when more confidence is gained. Do not wait for the perfect outcome; just do it.

By applying both business activities and investing wisely it will be possible to achieve your financial goals. Don’t forget to watch the Berkshire Hathaway annual meeting. Streams of the latest meeting will also remain available on Yahoo Finance.

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