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Two timeless tips from a legendary investor

Warren Buffett may be the greatest investor to ever live. But his mentor is a legend with some timeless advice for all of us.

By Betterment Editors

Published Nov. 28, 2023

Two timeless tips from a legendary investor Nov 28, 2023 11:06:49 AM Warren Buffett may be the greatest investor to ever live. But his mentor is a legend with some timeless advice for all of us. Warren Buffett’s mentor was Benjamin Graham. He wrote two of the most famous investing books ever written, with his most well-known book being The Intelligent Investor. The book was published in 1949 and his advice is still relevant today. If you don’t want to read Graham’s hundreds of pages of investment advice, don’t worry, we’ve summarized a couple of our favorite tips for you. Tip 1: Know what type of investor you are. Graham warned of, “...speculating when you think you are investing…” Graham divided investors into two camps: Defensive and aggressive investors. Both need to be cautious of becoming speculators, throwing money into the “hot” stocks of the moment. Defensive, or passive, investors want to avoid serious losses and the need to make frequent investing decisions. Aggressive, or active, investors have a willingness to devote time and care, and hopefully skill, to the selection of individual investments. Most people lean towards passive investing, but either way, avoid the temptation to speculate, especially unplanned speculation during market crazes (ahem, meme stocks). Tip 2: Be comfortable with market volatility. Graham writes, “Every investor who owns common stock must expect to see them fluctuate in value over the years.” When thinking about stock market volatility—the ups and downs of the market—consider this summary of Graham’s advice: Avoid timing the market. Graham was a big believer that it was nearly impossible for the general public to be successful at timing the market. We couldn’t agree more. You don’t need to watch your portfolio’s performance “like a hawk” as Graham wrote. Simply check it from time to time throughout the year to make sure your strategy aligns with your long-term investing goals. Bonus tips: For passive investors weathering a volatile market, Graham recommends (so do we!) the following investing approaches: Invest in low-cost funds: Look for well-diversified portfolios pre-built by experts to save you time. Use dollar-cost averaging: Consider depositing the same amount of money at fixed intervals (weekly, monthly, etc) over a period of time.

Warren Buffett’s mentor was Benjamin Graham. He wrote two of the most famous investing books ever written, with his most well-known book being The Intelligent Investor. The book was published in 1949 and his advice is still relevant today. If you don’t want to read Graham’s hundreds of pages of investment advice, don’t worry, we’ve summarized a couple of our favorite tips for you.

Tip 1: Know what type of investor you are. Graham warned of, “...speculating when you think you are investing…”

Graham divided investors into two camps: Defensive and aggressive investors. Both need to be cautious of becoming speculators, throwing money into the “hot” stocks of the moment.

Defensive, or passive, investors want to avoid serious losses and the need to make frequent investing decisions.
Aggressive, or active, investors have a willingness to devote time and care, and hopefully skill, to the selection of individual investments.

Most people lean towards passive investing, but either way, avoid the temptation to speculate, especially unplanned speculation during market crazes (ahem, meme stocks).

Tip 2: Be comfortable with market volatility. Graham writes, “Every investor who owns common stock must expect to see them fluctuate in value over the years.”

When thinking about stock market volatility—the ups and downs of the market—consider this summary of Graham’s advice:

Avoid timing the market. Graham was a big believer that it was nearly impossible for the general public to be successful at timing the market. We couldn’t agree more.
You don’t need to watch your portfolio’s performance “like a hawk” as Graham wrote. Simply check it from time to time throughout the year to make sure your strategy aligns with your long-term investing goals.

Bonus tips: For passive investors weathering a volatile market, Graham recommends (so do we!) the following investing approaches:

Invest in low-cost funds: Look for well-diversified portfolios pre-built by experts to save you time.
Use dollar-cost averaging: Consider depositing the same amount of money at fixed intervals (weekly, monthly, etc) over a period of time.

Ready to invest for the long term? Choose from our expert-built, diversified portfolios and use the recurring deposit feature to start dollar-cost averaging today.