Besides being one of the world’s richest persons, Warren Buffett is also one of the greatest teachers. He leads a simple life and advises others to do the same. He says, “If you buy things you do not need, soon you will have to sell things you need”. How true and what golden words of wisdom!
My Teenage Foolish Advice to Buy Things You Do Not NeedI also used to debate a lot on matters of science, economics and politics. In youthful rashness often stupidly I used to lead the debates into heated arguments. I still vividly remember the fiery disagreement I had with my eldest brother one day. In the quarrel, I vehemently contended that during times of high inflation it was better to blow the money instead of saving. When I reflect on it today what a stupid and absurd argument it was.
Of course, I was not completely wrong; it was useless to save when the return was lower than inflation. But the solution I suggested of blowing away the money was not right. Splurging on unwanted things simply because inflation was high cannot be justified. We should explore alternate avenues. of investment that yield returns greater than inflation; history proves that prudent investment in shares, or index mutual funds, coupled with patiently lying invested for a few decades, will certainly yield spectacular results.
Practising Austerity Not DifficultIt is not very difficult to practice austerity once you realize how compounding can produce spectacular results from tint investments. Even the few dollars you spend on a pizza can buy you a couple of stocks of a wonderful company. If the cost of a pizza can produce remarkable results, imagine what the cost of an expensive holiday can do?
Sadly, We Don't Heed the AdviceUnfortunately, we realise simple but solemn truths only late in life, by this time it might already be too late. And the realisation useless. Advertisers are marketers are ever trying to make spend on unwanted luxuries.
Recently I saw a tempting advertisement for a luxury, one-way flight ticket costing US$ 38,000 from New York to Mumbai. They provide you with a residence, comprising a bedroom, lounge and a shower room.
There are many such alluring offers, urging us to splurge.
ConclusionSadly, every day I see young and bright youth blowing away their handsome salaries on unwanted luxuries like expensive clothes, mobile phones, holidays and automobiles as if there is no tomorrow.
If only we could heed Buffett’s advice, lead simple lives and invest judiciously, we can not merely achieve financial freedom but can accumulate inexhaustible wealth.
If you don’t and continue in wayward ways and buy things you do not need soon you may have to sell things you need.