Top 10 Rules for Success From World's Richest Investors

Some of the world's richest investors built their fortunes by seeing opportunities differently than anyone else. Warren Buffett says the first rule is simple: stay inside your circle of competence and invest in what you actually understand.

The most important thing is to be able to define which ones you can come to an intelligent decision on and which ones are beyond your capacity to evaluate.

Sam Altman warns that following the investor crowd can lead you straight into the same mistakes I think this is a very common mistake that people make when they start investing.

You get very swayed by what previously successful investors think.

Mark Cuban takes it one step further. If you don't have an advantage, he believes you shouldn't be putting your money at risk at all.

My approach has always been, unless I know something specific, put it in cash.

Howard Marks built his investing philosophy around one powerful idea: know what something is worth, Then try to buy it for less.

The secret for success in investing is buying things for less than they're worth.

And Charlie Munger reminds us that building wealth requires realistic expectations.

My advice for a seeker of compound interest that works ideally is to reduce your expectations.

So today we're breaking down the top 10 rules for success from the world's richest investors, featuring powerful lessons on investing smarter, managing risk, and building wealth for the long term. If you want to make better investment decisions and take control of your financial future, this video is for you. Need motivation?

Watch a top 10 with Believe Nation.

If you've been here before, drop a hashtag #Believe in the comments below so I can feature you here in a future video. And if you're new, welcome to Believe Nation, the only channel that helps you believe in yourself daily, one video at a time. Okay, let's kick it off with rule number 1: invest in what you understand with Warren Buffett.

What would you think is the most important thing, the key in evaluating a company? I'm not asking about doing mediocre, I'm not asking about being average, but about excellent, remarkable. Just name one thing.

The most important thing is to decide, is to be able to define which ones you can come to an intelligent decision on and which ones are beyond your capacity to evaluate. You don't have to be right about thousands and thousands and thousands of companies. You only have to be right about a couple. I met Bill Gates on July 5th, 1991. We were out in Seattle, and Bill said, you've gotta have a computer. And I said, why? And he said, well, he said, you can do your income tax on it. I said, I don't have any income. Berkshire doesn't pay a dividend. And he said, well, you can keep track of your portfolio. I said, I only have one stock. He says, it's going to change everything. I said, well, will it change whether people chew gum? He said, well, probably not. I said, well, will it change what kind of gum they chew? I said, well, then I'll stick to chewing gum and you stick to computers. I don't have to understand all kinds of business. There's all kinds of business I don't understand, but there's Thousands of opportunities there. I did understand the Bank of America, you know, and I'll be able, I'm able to do that. I'm able to understand some given percentage, but Ted Williams wrote a book called The Science of Hitting, and in The Science of Hitting, he's got a diagram, shows him at the plate, and he's got the strike zone divided into 77 squares, each the size of a baseball. And he says, if I only swing at pitches in my sweet zone, which he shows there, and he has what his batting average would be, which is .400. If he had to swing at low outside pitches, but still in the strike zone, his average would be .230. He said the most important thing in hitting is waiting for the right pitch.

Waiting for the right pitch.

Now he was at a disadvantage because if the count was 0-2 or 1-2 or so on, even if that ball was down where he was only gonna bat .230, he had to swing at it. In investing, there's no called strikes. People can throw Microsoft at me, and you name it, any stock, General Motors, and I don't have to swing, and nobody's gonna call me out on called strikes. I only get a strike called if I swing at a pitch and miss, so I can wait there and look at thousands of companies day after day, and only when I see something I understand, and when I like the price at which it's selling, Then if I swing, if I hit it, fine, if I miss it, it's a strike. But it's an enormously advantageous game, and it's a terrible mistake to think you have to have an opinion on everything. You only have to have an opinion on a few things. In fact, I've told students, if when they got out of school, they got a punch card with 20 punches on it, and that's all the investment decisions they got to make in their entire life, they would get very rich, because they would think very hard about each one, You don't need 20 right decisions to get very rich. 4 or 5 will probably do it over time. I don't worry too much about the things I don't understand. If you understand some of these businesses that are coming along and can spot things on— if you can spot on Amazon, for example, I mean, it's a tremendous accomplishment what Jeff Bezos has done. I tip my hat to him. He's a wonderful businessman. He's a good guy too. But could I have anticipated that he would be the success and 10 others wouldn't be? I'm not good enough to do that, but I don't, fortunately I don't have to. I don't have to form an opinion on Amazon, and I did form an opinion on the Bank of America, and I formed an opinion on Coca-Cola. I mean, Coca-Cola's been around since 1886. There's 1.8 billion, 1.8 billion 8-ounce servings of Coca-Cola products sold every day. Now if you take 1 penny and get 1 penny extra, that's $18 million a day, and $18 million times 365 is $7 billion, $3 less, $730 billion, or $6,570 million. So annually, $6,570 million from 1 penny. Do you think Coca-Cola's worth a penny more than, you know, Joe's Cola? I think so. So, you know, and I've got about 127 years of history that would indicate it. So those are the kind of decisions I like to make.

Rule number 2 is don't follow the investor crowd with Sam Altman.

The number one mistake was that I cared too much about what other investors thought. And the sooner you can free yourself of this, the better. I think this is a very common mistake that people make when they start investing. You get very swayed by what previously successful investors think. The first question that most people ask YC startups is, who else is investing in your round? People totally outsource, I would say 80% of investors outsource 80% of their decision-making to what other people think about an investment opportunity. But the problem is everyone does that. And so there's this weird schooling effect where a company gets hot for no discernible reason or it fits a trend or whatever and then everybody wants to invest in one company. And it's just because a few people decided they liked it. So the number one mistake I made was to be too swayed by what other investors thought good and bad about a company.

Rule number 3, don't invest unless you have an edge with Mark Cuban.

Back in 2006 and 2007, I was writing blogs saying, look, the stock market's for suckers. You're getting put, you know, when you sit down at the business table, you always look for the sucker, and if you don't see it, it's you. And you've got all these professional people on the other side of the trades. I mean, When I started trading stocks in the early '90s after I sold my first company, you know, you could understand different elements of the market better than the professionals. So I can understand, you know, new technology from Wellfleet and Synoptics and all these old technology companies better than the traders. Today there's so much money in these huge hedge funds and then they have such professional research and in-depth research, there really aren't any advantages for the individual traders.

And so my approach has always been, unless I know something specific, Rule number 4 is use gold as a portfolio diversifier with Ray Dalio.

Money is debt and debt is money. What I mean by that is if you have money, you're storing it in the form of a debt instrument. And a debt instrument is a promise from somebody to give you money. And when we have too much debt and supply and the supply demand that we're talking about, there's a high likelihood of the devaluation of money. And that's not just American money. That is most money because countries are in similar positions and they don't want to get uncompetitive by having uncompetitive exchange rates. So such periods of that, such as the '70s, the 1970s or the 1930s, are periods in which one has to worry about the value of money. That's why gold is going up so much.

Right.

Right.

Okay. Because— and reserve—

And that's why you give your grandchildren gold every year.

Gold coins.

Gold coins every year. And you have them take a look and measure it against the value of their toys.

Right?

Well, yeah, I give them a gold coin every year for their birthday and then for Christmas. And then, so they, then over a period of time, they get to see that everything else disappears and the gold coin remains. And, but that gold coin can't be spent until sometime in their life when there's an emergency need for that. Okay. So gold is an effective storehold of wealth, and it also is an effective diversifier to a portfolio. A normal efficient portfolio should have somewhere in the vicinity between 10 and 15% in it as an effective diversifier for that value of money. Most portfolios don't. I'm not, I'm not here to provide investment advice.

Right.

Of course. But I'm—

I do want to say that diversification and thinking about the value of money, what is a storehold of money? This is going to be a very important theme as we think, what is money? What is money as a medium of exchange? But it has to be a storehold of wealth. And we have a problem regarding that.

Also, if you want to take real action after this video, I made a free worksheet just for you. It covers the top lessons from today, gives you space to write biggest takeaways, and helps you build a simple action plan. It's 100% free. Just click the link in the description below to go grab it, and I'll see you there. Rule number 5 is buy for less than it's worth with Howard Marks.

How do you make money as an investor? The people who don't know think the way you do it is by buying good assets, a good building, stock in a good company, or something like that. That is not the secret for success. The secret for success in investing is buying things for less than they're worth. So if you buy a high-quality asset, You know, there's a— and I say in the book, there's a guy on the radio I used to— when I lived in LA, I listened to NPR on the way to work. And there was a guy who's— and I heard him say it. He said, well, if you go into a store and you like the product, buy the stock. Couldn't be more wrong. Because what determines the success of an investor is not what he buys, but what he pays for it. And if you buy a high-quality asset, but you overpay for it, you're in big trouble. You can buy a very low quality asset, but if you pay less than it's worth, chances are you're going to make money. So the book says— chapter 3 says the most important thing is value, figuring out what the value of an asset is. But chapter 4 says the most important thing is the relationship between price and value. So let's assume that you're able to figure out the value. If you pay more than that, you're in trouble. If you get it for less— You're in business. The wind is at your back.

Rule number 6 is start investing with Kevin O'Leary.

You talk about saving money and not spending any money, and that has to be part of your protocol, how you live your life. And you have to invest, not just save. I've talked about this dozens of times, but that means you can't buy anything. You're always taking $100 a week, which is what I say you should do, and investing it over the long period because the markets give you somewhere between a 6% and 8% return over long periods of time. Yes, they go up and down, but the whole idea I've been talking about is taking a portion of your salary. Let's say you only make $56,000 a year, the average salary, and you take $100 a week and you start investing it. Not saving it in a savings account, because that doesn't pay any interest anymore, but putting it into the stock market and letting it grow over 30, 40 years. If you do that and you have that discipline, you'll end up a millionaire in your 60s, where you really need to have some money to retire with. As much as $1.5 million. So I think that's a pretty pragmatic strategy. Where did I learn that? from my mother, Georgette. But the question I'm always getting is, what about living? What about spending on things that you love? What about clothes? What about fashion? What about all the things that I want to buy? Do I, do I have to just go Spartan? I can't buy any of that stuff? Not true. I want you to have a different mindset when you purchase things for yourself. And let me give it to you in a lesson that I learned from my own mother. And I've told this story countless of times.

Countless times.

Countless times. My mother, Georgette, was a working girl in her 20s. She worked at a factory owned by her father that made children's winter clothing. She would save 20% of her salary each week and invest it. But it's not all she did with it. She loved fashion too. She loved clothing. She liked to buy things for herself, but she had a different mindset about it. She told me years later, and this really changed the way I think about buying stuff, that she would save a whole year just to buy one jacket instead of buying a whole ton of cheap stuff that she would throw out a year later and maybe not even wear. She would save up for one thing that she really wanted. She loved Chanel. So when it came to clothing, she loved Chanel jackets. They cost a fortune back then. But they were very high quality and they looked beautiful, and her thinking was they last forever in your wardrobe. Chanel never goes out of style. Now, talking about style and talking about fashion, in Georgette's mind was it really is who you are. You're presenting yourself to the world and you want to look good. You want to feel good about yourself. The reason I tell you that story and why it's so powerful to me is years later, When she passed away and I became the executor for her estate, I started getting phone calls from all the women in my extended family saying, what happened to Georgette Chanel jackets? What do you mean, what happened to them? They're hanging up in the wardrobe. Well, I would like one of them. In fact, I'd like them all. And I began to realize that these jackets were classics. All the women were fighting over them. They all wanted the Chanel jackets. Why? They were worth more today than they were 30 years ago because they were one of a kind, in some cases classic Chanels. How brilliant Georgette was, how genius that was. She invested in herself, in something she really loved that appreciated in value. That's what I'm talking about.

Rule number 7 is invest in real estate with Grant Cardone.

I just want to share with you guys, you crypto, real estate, and bond, stock and bond day trader investors, I want to share with you the 5 benefits of real estate over stocks and bonds. Number 1, and you cannot deny this, tangible asset. Real estate is a physical, very often very difficult to replace asset. It offers a sense of security and the potential for appreciation over long periods of time. Unlike stocks, pieces of paper, and bonds, or even cash, savings accounts, or money markets, Real estate is a tangible asset as opposed to intangible. Real estate investments give you, the investor, direct control over a real asset. Number 2, cash flow. There is no asset— gold, silver, Bitcoin, bonds, or stocks— that cash flow like real estate. Real estate investments typically provide a consistent and even monthly passive income for the passive investor from rental income, which offers you a regular source of cash flow for your investors. And by the way, cash flow is what your family depends on. Okay, whether you're working or not, you need cash flow. Number 3, diversification. Real estate investments offer a great diversification from traditional stocks and bonds and potentially reduces somebody's overall portfolio risk. In fact, I'm so bullish on real estate going forward that I actually have more of my diversification across my asset classes because of the number of doors and different properties that I own in different states. That's right, you can actually take real estate and have diversification because of location and scale. Number 4, inflation hedge. For thousands of years, real estate has proved to be a great hedge against inflation that we're in right now, meaning real estate generally maintains or increases their value over time beyond the cost of living rises. Number 5, and the mack daddy, okay, Now, I wouldn't do this without the other 4, but tax benefits of real estate are like none other. There is no comparison anywhere in the world. Real estate offers the best tax advantages, deductions for mortgage interest, property taxes, rehab, CapEx— like, it is endless, including accelerated depreciation, which has literally wiped out in many years my income tax bill to zero. Look, it's worth noting that every investment, as you know, has some kind of risk. But if you want the biscuit, you gotta risk it. And the best risk for me is to never lose my money, to get cash flow, to get appreciation, to get leverage, and to get the tax write-offs. And ain't but one thing that sounds like that, and it's called real estate. Get invested today. As they say, don't wait and invest in real estate. Buy real estate and wait.

Rule number 8 is have realistic expectations with Charlie Munger.

My advice for a seeker of compound interest that works ideally is to reduce your expectations. Because I think it's going to be tougher for a while. And it helps to have realistic expectations. Makes you less crazy.

And—

but— I think that— You know, they say that common stocks from the aftermath of the Great Depression, which was the worst in the English-speaking world in hundreds of years, to the present time, maybe an index has produced 10%, but that's pre-inflation. After inflation, it may be 7% or something. And the difference between 7% and 10% in terms of its consequences are just—

Huge.

hugely dramatic over that long period of time. And if that's 7% in real terms that may have been achieved starting in a perfect period through the greatest boom in history, starting now it could well be 3% or 2% in real terms. It's not unthinkable you'd have 5% returns and 3% inflation or some ghastly consequences like that. And so— The ideal way to cope with that is to say, if it happens, if that happens, I can have a happy life. Because why shouldn't you be happy in spite of the fact that the civilization wasn't quite as easy as it was for my generation? And now beyond that, when it gets more difficult, how should you do it? Well, the answer is, because it's gonna be very difficult, you should work at it. And if all that gets you is 6%, For a lifetime of work instead of 5, you should be cheerful about it. If you want to hit it out of the park easily, you should talk to Jim Cramer.

Rule number 9 is look for incentives with Bill Ackman.

If you want to understand why someone's doing something, understand what incentives they have. It works particularly well in business. You know, if you see a company, you know, Doing the serial acquisitions, you know, how is the CEO being compensated? You know, how are the shareholders sort of looking at the business? So just look for incentives and you understand why people do things. So getting those incentives designed correctly is probably one of the most important things one can do as a, you know, if you're on the board of a company, for example, or on a compensation committee. But it applies to everything.

And rule number 10, the last one before a very special bonus clip, is invest in silver with Robert Kiyosaki.

My advice to young Indians is this is the best investment in the world today. It's called silver. Okay. And the reason I say that is because I study history a lot. This here is fake money. I would never work for this stuff. It's good as toilet paper. So the biggest investment today is this. This is $35 US. And I think everybody in the world can afford this today.

Hmm.

And I tell people every day, you should buy this. No, I'll save this. You see, they don't know the difference between this is fake money, this is real money. And this here is gold. Real money, fake money. So the yen, the rupee, the dollar, the peso, all fake. So when I was 9 or 10 years old, I started finding that out. I said, how come they don't teach us money at school? Well, they don't want you to know it's fake.

Ray Dalio is one of the greatest investors in history, obviously. Good friend of mine. And I interviewed him years ago for— I went in for a 30-minute interview and he said, Tony, walked out with a 4-hour, 'cause I just dug into his brain. But at the end, one of the last questions I asked him is, what's the single most important investment principle you could teach another human being? He said, Tony, well, you have to understand all investing is risk reward. And he said, so the more you can reduce your risk but have upside reward, the better it is. But there's only one way to do that consistently without luck. And he said, I call it the holy grail of investing. He said, funny you should say that. I worked on it for 30 years to refine this principle for myself. And he said, if you have 8 to 12 uncorrelated investments, hard to get uncorrelated today, right? Because many things are aligned across markets today. But you can do it when you have private equity investments, private credit investments, and so forth. He said, if you can find 8 to 12 that are strong investments, you reduce your risk 80% and you gently increase your upside. There's no loss on your upside.

And congratulations, you're one video closer to who you're meant to be.

Believe.

For 10 more amazing rules from the world's richest people, check the video right there next to me. I think you'll love it. Continue to believe and I'll see you there. Warren Buffett focused on what a business would be worth years into the future.

90% of the people, that buy stocks don't think of them the right way.

Jeff Bezos trusted his instincts when everyone else doubted him.

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