Hearing “a penny saved is a penny earned” from your grandfather may not have instilled the necessary wisdom to save and invest successfully. Fortunately, dozens of successful businesspeople, investors and entrepreneurs have provided their knowledge through books, interviews and more. These quotes offer investors a snapshot of timeless financial advice to help you make smart decisions. If you want more personalized financial advice to help you reach your goals, you may want to work with a financial advisor.
1. “An Investment in Knowledge Pays the Best Interest” (Benjamin Franklin)
One of the Founding Fathers of the United States and a polymath known for his wisdom and wit, Benjamin Franklin provides a statement with several layers of meaning. First, education is vital to success in all aspects of life, including finances. At its core, the quote emphasizes the value of acquiring education and gaining knowledge. It suggests that dedicating time, effort and resources to learning and expanding one’s intellectual horizons is one of the most valuable investments a person can make. Plus, the payout lasts a lifetime.
In addition, the phrase “pays the best interest” implies that the returns from knowledge are superior to those of other investments. In other words, the quote suggests that the personal and societal returns from education and learning are greater than those from other pursuits or investments. For example, countless lottery winners have received instant wealth only to spend it all without acquiring assets or setting up passive income streams. Therefore, an investment of knowledge will help you optimize your finances, whether you’re a multi-millionaire or want to put food on the table while saving for retirement.
Lastly, knowledge creates a positive feedback loop. Like compound interest, knowledge grows over time, empowering you to gain further insights or opportunities. As a result, knowledge mirrors financial investments by enabling more accumulation of skills and resources.
2. “I Will tell You How to Become Rich… Be Fearful When Others Are Greedy. Be Greedy When Others are Fearful.” (Warren Buffett)
Warren Buffett, one of the most successful investors in history, is known for his insightful investment strategies and principles. This quote encapsulates a fundamental aspect of his approach to investing. It advocates a contrarian approach to investing, meaning doing the opposite of what the crowd does. Buffett advises investors to go against the prevailing sentiment in the financial markets.
The first part of the phrase means to exercise caution when others become excited. When the stock market soars and everyone is eager to jump in and make quick profits, it can create a sense of greed and over-optimism. During these times, prices of assets may become inflated and investors often underestimate the risks, as with the financial meltdown of 2008. As a result, the word “fearful” means stepping back and taking a level-headed look at the market instead of getting caught up in the euphoria of the latest boom. It’s best to consider whether the investments are solid outside of an emotional context and whether current prices reflect their value.
Next, when markets are in a downturn, fear and panic can drive prices down to levels that may not reflect the true long-term value of assets. Buffett suggests that during these times of fear and pessimism, investors with a long-term perspective can find excellent investment opportunities. By being “greedy” when others are “fearful,” you can buy assets at a discount, positioning yourself for potential future gains when the market eventually improves.
In essence, Warren Buffett is advocating a disciplined, patient and rational approach to investing. Successful investing means not getting carried away by the crowd’s emotions and instead making investment decisions based on a careful assessment of fundamentals and valuations. This approach requires thorough market knowledge and aligns with Buffett’s value investing philosophy, which focuses on buying undervalued assets and holding them for the long term, regardless of short-term market fluctuations.
3. “The Individual Investor Should Act Consistently as an Investor and not as a Speculator.” (Ben Graham)
This quote by Benjamin Graham, a renowned economist and investor, clearly distinguishes between being an investor and a speculator, emphasizing the advantage of acting consistently as the former.
Investors typically have long-term goals, such as building their wealth to a specific amount for retirement. As a result, they prioritize steady gains and avoid high risks. Their portfolios are full of companies with healthy cash flows and excellent track records. These traits mean investors build wealth consistently and wisely by making well-informed, rational decisions about where to put their money. Because they diversify, they can weather bear markets and reap the benefits during bull markets.
On the other hand, Graham advises against acting as a “speculator.” Speculators use high-risk, short-term trading strategies to make quick profits based on market fluctuations and trends. Speculation tends to involve more uncertainty and risk than the typical investor has the tolerance and cash reserves for and it often relies more on luck or timing than on an analysis of a company’s financials.
4. “The Biggest Risk of All Is Not Taking One.” (Mellody Hobson)
Mellody Hobson, president of Ariel Investments and the chairwoman of Starbucks, uses this quote to encapsulate a powerful message about taking opportunities when they present themselves. All opportunities in life come with some level of risk, whether it’s pursuing a new career, starting a business or investing. If you avoid all risks, you’ll inevitably miss out on potentially rewarding experiences and achievements.
While it’s crucial to balance caution and enthusiasm, failing to act is a guaranteed way to fail at accomplishing your goals. You’ll never iron out all the uncertainty in a situation, meaning you’ll have to move forward and take the challenges head-on.
The quote also touches on the concept of regret. It suggests that wondering “what if?” about a regret can be more significant and emotionally burdensome than the potential negative consequences of taking a calculated risk. In other words, it’s better to try and fail than to never try at all.
In a broader context, this quote reflects that individuals and organizations that take calculated risks drive the progress and innovation that improve our lives. New inventions, groundbreaking discoveries and transformative changes usually require stepping into the unknown.
5. “Returns Matter a lot. It’s our capital.” (Abigail Johnson)
Abigail Johnson, president and CEO of Fidelity Investment, supplies a concise quote underscoring the primacy of investment returns, particularly in the context of managing and growing wealth. Specifically, returns on investments play a critical role in the growth and preservation of capital. When you invest, you deploy your capital in various assets, such as stocks, bonds, real estate or businesses, expecting to earn a return. You can then reinvest these returns to put even more cash into assets and set yourself up for greater returns.
The quote also suggests that investors should be mindful and responsible stewards of their capital. Managing investments to achieve favorable returns is not just about making money; it’s about protecting and growing the resources at your disposal. So, making well-informed investment decisions generates more capital, optimizing returns.
6. “Know what you own and know why you own it.” (Peter Lynch)
Peter Lynch, a legendary mutual fund manager and investment guru, coined this phrase to convey a fundamental tenet of prudent investing. The first part of the quote stresses the importance of thoroughly understanding the assets in your investment portfolio. It involves knowing your portfolio’s companies, industries or sectors. Otherwise, you’re throwing money into places you don’t understand and have little idea of what returns to expect.
The second part of the quote goes a step further. It emphasizes that it’s not enough to own an investment; you should also have a clear and rational reason for holding it in your portfolio. This reason could come from your financial goals, risk tolerance or a belief in the long-term potential of the investment. As a result, the quote encourages investors to avoid blind speculation and base their investments on knowledge.
7. “It’s not how much money you make, but how much money you keep, how hard it works for you and how many generations you keep it for.” (Robert Kiyosaki)
Entrepreneur and author Robert Kiyosaki’s quote highlights several concepts related to personal finance, wealth management and generational wealth.
The first part of the quote emphasizes earning a high income doesn’t equal accumulating wealth. Instead, you build wealth when your revenue is greater than your expenses. Keeping a positive cash flow involves budgeting, saving and making wise investment decisions.
The second part of the quote refers to how fruitful your investments are. Investing successfully means your dollars provide hefty returns over time. So, investing your extra cash in the stock market instead of leaving it in your checking account means putting your money to work.
The last part of the quote introduces the idea of generational wealth. This concept means accumulating wealth for your own lifetime and passing it on to your children and grandchildren. It encourages a long-term perspective on financial planning and legacy building.
As a result, the quote suggests that building and preserving wealth is a process that extends beyond solely earning money. Instead, a combination of earning, saving, investing and wisely managing resources is essential.
8. “Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas.” (Paul Samuelson)
Paul Samuelson, a Nobel laureate in economics, expresses an essential principle of long-term, prudent investing with his quote. Although seeing your IRA grow is more thrilling than watching paint dry, Samuelson uses hyperbole to direct investors away from adrenaline-fueled gimmicks. For example, some investors profited from the Gamestop short squeeze in 2021, but this type of phenomenon can burn you if you’re not an expert in options trading. Instead, a patient, methodical process with well-considered decisions will benefit your portfolio more over time.
By contrasting investing with the excitement of Las Vegas, Samuelson is cautioning against speculative behavior in the financial markets. Going to the casino is fun, but you rarely win; when investing for retirement, it’s best to lower the risk with calculated investments in stocks, bonds and other assets.
Lastly, the quote serves as a reminder that investing, while potentially lucrative, is not a source of instant gratification. It’s a process that requires discipline, research and an understanding that returns accumulate gradually over time.
9. “The four most dangerous words in investing are, it’s different this time.” (Sir John Templeton)
The late Sir John Templeton ran his own investing company for 38 years. His quote is a cautionary statement about a common pitfall in financial markets and investment decisions: overconfidence. Investors can fool themselves into thinking current circumstances are so unique or extraordinary that past lessons, patterns and consequences no longer apply. The phrase “it’s different this time,” invokes an idea that an opportunity is so special that it defies investing fundamentals or common sense. This idea can lead to risky investment decisions based on a flawed assumption.
Templeton’s quote warns that dismissing the lessons of history can be perilous. What appears unusual at a given moment may not be as exceptional as it seems. Ignoring historical context can lead to complacency or excessive risk-taking because investors believe standard rules no longer apply. For example, the current lawsuits against FTX mirror the Enron scandal from decades ago. In both cases, a thorough look at the companies’ fundamentals revealed a lack of solid valuation.
In short, the quote encourages a more wise and cautious approach to investing. Instead of assuming that current conditions are unique, investors should consider historical precedents and prepare for the possibility that current sectors and companies may follow familiar patterns.
10. “The most contrarian thing of all is not to oppose the crowd but to think for yourself.” (Peter Thiel)
Peter Thiel, cofounder of PayPal, exemplifies what thinking outside the box means. His quote mirrors his business practices, stressing that contrarian thinking isn’t simply going against the grain of society. Instead, being a contrarian means developing a thoughtful critique of a particular piece of conventional wisdom and offering a better answer. This approach can be valuable when creating a business or ignoring popular sentiments of irrational exuberance or fear.
Remember, while contrarian thinking can be valuable, it’s not always the right approach. Sometimes, the crowd’s opinion may be correct. The quote suggests that independent thinking means being open to all possibilities, including those that align with the consensus and making informed decisions rather than automatically opposing or following the crowd.
As a result, Thiel’s quote encourages you to think for yourself. By critically evaluating information, forming your own opinions and making decisions based on your analysis, you can get ahead instead of following what others are doing or saying.
Overall, these quotes encourage an investing approach balancing caution with risk-taking, doing your homework, thinking for yourself and focusing on the long haul. In addition, they emphasize how successful investing is ultimately up to you. Following the crowd can get you into as much trouble as it can keep you safe, so it’s crucial to apply logic and remember investing fundamentals when creating your portfolio. As a result, the power to navigate the complex landscape of financial planning and invest successfully is in your hands.
Tips for Investing
- The collective wisdom of every top investor can be a lot to absorb. Fortunately, you can hire a trained professional to bounce ideas off of and collaborate with to create a winning investment strategy. A financial advisor can help you plan your approach, whether you’re investing for retirement, a kid’s college fund or a business. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- The quotes above come from individuals who generated millions of dollars for their businesses and themselves. If you want to get on track for success, you can place your money in the same assets millionaires do.
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