Warren Buffett, one of the world's greatest investors, has recently issued a shocking warning. According to him, 40 percent of Gen Z's wealth has been almost wiped out due to the recent market decline. This situation has arisen because young investors are making a serious mistake. Buffett says that the problem is not in investing, but in the way of investing. He had seen the same mistake during the dot-com bubble when young investors did not understand the difference between speculation and investment. Gen Z refers to the generation born between 1997 and 2012.

According to Buffett, speculation means that you are investing money in the hope that someone else will buy it from you at a higher price. The same thing is happening on social media today. With the advent of commission-free trading apps, investing has become a kind of game. Gen Z investors trade 25% more than average investors. The main reason for this is "the obsession of getting rich quickly". But Buffett warns that this is not an investment, but gambling. And in gambling, the house always wins.

Explained the true meaning of investment, which people do not even know
Real investment, according to Buffett, is that you invest money in the hope that you will get returns from that asset in the future. It is not about following a trend or making short-term profits, but about owning a business. Buffett believes that along with choosing the right companies, it is also important to be patient. His favorite holding period is – “forever”. Why? Because he knows that giving time to the market is better than timing the market.

Buffett's track record is proof of this. From 1965 to 2020, Berkshire Hathaway's book value recorded an annual growth of 19 percent, while the S&P 500 gave a return of only 10.2 percent. He says that the new generation should also adopt a similar strategy. According to him, one should start investing with index funds, such as low-cost S&P 500 funds. Also, all dividends should be reinvested and investments should be automated. Buffett says, "The more you trade, the less you will earn." This is the only rule to make money in the stock market.

If someone wants to save money, learn from Buffett.
Buffett's lifestyle also reflects his investment principles. He still lives in the same house that he bought in 1958 for $31,500. At that time, $100 used to mean about Rs 500. That means Buffett bought that house for about Rs 1 lakh 50 thousand at that time. He eats breakfast at McDonald's with coupons. He believes that the best investment is in yourself, and this requires capital. Therefore, he always keeps his expenses under control.

Another important principle of Buffett is - investing in your knowledge. He spends 80 percent of his day reading. He does not spend time looking at stock prices or following trends, but rather learning about different businesses. He believes that you should not buy a stock just because it is trending, but because you understand that business. Even if the market closes for 10 years, you should still feel happy holding that company.

Investment is not entertainment.

It is very important for Gen Z to understand and adopt the principles of Buffett. In today's era, where social media and trading apps have made investment a kind of entertainment, Buffett's advice becomes even more relevant. He says that earning money does not mean becoming rich quickly, but not becoming poor slowly. This is the mantra that makes Buffett's investment philosophy timeless.

How will Buffett's formula apply to India?

If seen in the Indian context, this principle becomes even more important. India has a large population of youth, who are taking new steps in the world of investment. Trends like cryptocurrency, penny stocks, and intraday trading have attracted the youth. But Buffett's advice is to stay away from these things and focus on long-term investment. Investing in index funds and blue-chip companies can be a safe and smart option in the Indian market too.

Disclaimer: This content has been sourced and edited from News 18 hindi. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.