What Even a Beginning Investor Can Learn from Warren Buffett

Even when you're just starting out with investing and organizing your personal finance goals, you can consider some worthwhile lessons from the pros. Increasing your net worth can become a reality no matter what age you are, and taking the step to simply open an investment account will get you on the right track.

Warren Buffett has become a master of the portfolio, a valuable resource for many investors interested in making sense of corporate America's trends, patterns, and market behavior. He is an American investor and businessman with a current net worth of $52 million. In April 2007, he was ranked as the third-richest person in the world by Forbes, and reports an annual salary of about $100,000. Even though Warren Buffet is one of the wealthiest men in the world, he continues to invest his money and assets with strategy and seemingly perfect timing.

Warren Buffet learned the stock game at an early age, and his own father was a stock broker in Omaha. He built a business out of investing, and these only compounded throughout his lifetime; his mentor, Benjamin Graham, taught him how to modify the traditional value investing approach and use it to its best advantage; some key lessons can be learned from his deals and negotiations.

If you're a beginning investor, consider the following as you develop your strategy:

1. Does the company have a consistent return on invested capital? You will need to review financial statements to determine if this is the case; if so, it may provide long-term value for your
2. Does the company show a strong track record of growth? Again, financial reports are readily available online or through the company's press division.
3. Can you wait to determine significant value for a particular stock price, and turn down even seemingly reasonable prices? Jumping into the next buy isn't necessarily the best course of action, and Warren Buffet has become famous for his accurate timing in this respect
4. Are you willing to be aggressive when the market is unstable? Warren Buffet earned much more than other investors during the Internet crash of the decade, and continues to look for opportunity where others see low potential
5. Does the company have a ‘prudent' approach to debt? Are they conservative with their spending and strategy, or do you see significant fluctuations in their debt allocations?
6. How does the company deal with growth and managing its earning capacity? Key details to look for include adding new brands, capital expenditures, and adjusting for inflation.

Warren Buffet also emphasizes the review of the following areas in financial reports:

• Earnings and dividends yields
• Book value
• Comparative rates of return
• Price/earnings ratios

Learning how to review and make sense of financial reports and stock data on the internet are essential for your investing strategy, even if you're a beginning investor. Warren Buffet demonstrates years of experience with sound investment practices and judgment; you can apply his basic perspective when making your own investment decisions.