Warren Buffett isn't letting the pandemic get in his way.
The 90-year-old investing legend has gotten both his COVID shots, and so has his longtime business partner, Charlie Munger, according to a report by Bloomberg.
Though Buffett wasn't able to immunize his company from the coronavirus economy, Berkshire Hathaway Inc. has been making a strong recovery. Profits were down 48% last year at the massive conglomerate, but earnings during the final quarter of 2020 jumped 23% from a year earlier.
So, all in all, the billionaire businessman would seem to be weathering the crisis just fine. You can, too — if you follow his lead.
Here are six lessons from Buffett on how to protect your money as the pandemic hangs on.
1. Pounce on low interest rates
With interest rates falling, Buffett says it's a great time to borrow.
Buffett became one of the richest people on Earth by taking advantage of opportunities. In the last year he has been pointing out fantastic opportunities for borrowers, thanks to the Federal Reserve's response to the COVID crisis.
The Fed "did the right thing" by cutting a key interest rate almost to zero in response to the virus, Buffett says. The central bank continues to hold rates down, and that's helped keep other borrowing rates low.
"This is a very good time to borrow money, which means it may not be such a great time to lend money, but it’s good for the country that it’s a good time to borrow money," he said during Berkshire Hathaway's online shareholders meeting last May.
How you can be like Buffett: If you're a homebuyer or homeowner and have a solid credit score, grab one of today's historically low mortgage rates while you can.
Though rates have been rising in recent weeks, you can find new and refinance mortgages at 3% or lower — if you shop around and compare mortgage offers from multiple lenders.
2. Keep your guard up
Buffett said a 'megacatastrophe' was coming.
They don't call Nebraska native Buffett the Oracle of Omaha for nothing. The multibillionaire told an interviewer in March of last year: "I've always felt a pandemic would happen sometime."
In 2019, he warned his Berkshire shareholders in a letter that the world was due for a "megacatastrophe," some kind of "total surprise" that would dwarf the devastation from hurricanes Katrina and Michael.
Buffett wrote that the monster disaster would lead to massive losses for his company, which is big in insurance (it owns Geico and other carriers) — but Berkshire would be ready for business the next day, he said.
How you can be like Buffett: You, too, can be ready for whatever comes — by buying life insurance, to provide financial protection for your loved ones. Sales of policies for family breadwinners have spiked during the pandemic.
You can easily go online and find multiple life insurance offers tailored to your family’s needs and costing as little as $1 a day for $1 million in coverage.
3. Don't carry credit card balances
Buffett says if you're carrying credit card debt, get rid of it
As the crisis has caused layoffs to skyrocket, some Americans have found themselves forced to pile on more credit card debt.
Turning to credit cards because of financial hardship is one thing, but Buffett says some people use plastic as "a piggy bank to be raided."
During the virtual shareholders meeting, he talked about a friend who came into a windfall and asked for advice on what to do with it. She also had credit card debt — at 18% interest.
"If I owed any money at 18%, the first thing I’d do with any money I had would be to pay it off," Buffett said he told her. "You can’t go through life borrowing money at those rates and be better off."
How you can be like Buffett: When credit card debt becomes overwhelming, one first step toward getting rid of it is to roll it into a debt consolidation loan.
You'll simplify your bills and slash yout interest costs, to help pay off the debt faster. Instead of 18%, you might find yourself paying as little as 5.95% APR.
4. Do your homework with stocks
Buffett has gotten out of airline stocks because of COVID-19.
The coronavirus has ravaged entire industries, including retail, restaurants and entertainment. Buffett decided the damage to one particular sector was more than he could bear as an investor.
"The airline business — and I may be wrong, and I hope I’m wrong — changed in a major way," he told his shareholders. That was how he explained why Berkshire sold off all the airline stocks it owned.
Buffett says people have been discouraged from flying, so "the world has changed for the airlines."
How you can be like Buffett: Investors who do their homework have been rewarded during the pandemic as the stock market has marched to new all-time highs. Today's investing apps can help you make smart choices.
One popular app allows you to round up your purchases and invest your spare change, in portfolios that automatically rebalance to the market's ups and downs.
5. Stick to your long-term plan
Buffett says stay on target with your financial goals.
Warren Buffett says he's confident the U.S. economy will bounce back from the COVID recession.
"Despite some severe interruptions, our country’s economic progress has been breathtaking," he writes, in his annual letter to shareholders released last weekend. "Our unwavering conclusion: Never bet against America."
But Buffett also has said no one knows what's going to happen, so investors should brace themselves for a potentially long recovery. He says they'll get a good result if they hold onto stocks long-term.
How you can be like Buffett: Financial planning services are more affordable and convenient than you might think, and can help you sit tight and stay focused with your investments.
Today, you can connect with a certified financial planner online and inexpensively, to keep you on track toward your long-term goals
6. Demand help if you need it
Buffett says the coronavirus has thrust the U.S. into an "economic war," and many small businesses have become casualties. He has urged Congress to provide more help.
"We’ve shut down a lot of people in this particular induced recession and others are prospering, and I think the country owes it to the really millions of small businesspeople," Buffett told CNBC in December..
A COVID-19 rescue package approved in late December included funding for $284 billion in new "paycheck protection" small business loans. President Joe Biden's relief plan that's now before Congress would provide $15 billion in grant money for more than 1 million hard-hit businesses.
How you can be like Buffett: If you're a business owner or a family breadwinner in financial distress, look for sources of relief — and take advantage of what's out there.
That means, for example, if you've got federal student loan debt, don't make payments until October, when the government's moratorium is currently scheduled to end. Private loans can be refinanced at today's sharply lower interest rates.
Article From & Read More ( Warren Buffett's 6 rules to stay financially healthy during the pandemic - Yahoo Finance )https://ift.tt/3uZcqMq
Business
Bagikan Berita Ini
0 Response to "Warren Buffett's 6 rules to stay financially healthy during the pandemic - Yahoo Finance"
Post a Comment