4 investment lessons from famous historical figures

NNatalie January 27, 2024 7:01 AM

We've always looked to history for lessons, and when it comes to investing, there's no exception. Our past is rich with insights on financial success from some of the greatest minds. Here are four investment lessons we can learn from famous historical figures.

1. Benjamin Franklin: Understand the Value of Compound Interest

Benjamin Franklin, one of the Founding Fathers of the United States, was not only a statesman, but also a savvy investor. He understood the power of compound interest, a concept he aptly described as 'money making more money'.

Franklin famously left a sum of money to the cities of Boston and Philadelphia in his will, to be invested and used after 200 years. The cities received millions thanks to the power of compound interest. His lesson to us is clear - invest your money wisely, and let it grow over time.

2. Warren Buffet: Invest in What You Understand

Although not a historical figure in the traditional sense, Warren Buffet is undeniably a significant figure in the investment world. His main advice is always to invest in what you understand.

Buffet is known for his straightforward approach to investing. He invests only in businesses he thoroughly understands and believes in. This principle can save us from jumping into risky investments that promise quick returns but are inherently risky.

3. Jesse Livermore: Learn from Your Mistakes

Jesse Livermore, a famous stock trader from the early 20th century, learned most of his lessons the hard way. He made and lost fortunes several times over. His biggest lesson? Learn from your mistakes.

Livermore emphasized the importance of self-reflection in investing. He believed that understanding one's mistakes is the key to avoiding them in the future. This lesson is timeless - not just in investing, but in all aspects of life.

4. J.P. Morgan: Keep Your Emotions in Check

J.P. Morgan, the renowned banker and financier, famously said, 'The first step towards getting somewhere is to decide you're not going to stay where you are.' He understood that letting emotions influence your investment decisions can lead to poor results.

Keeping your emotions in check, according to Morgan, is crucial to investment success. It helps to make rational decisions and prevents one from making impulsive investment moves.

Here's a quick recap of the lessons from our historical figures:

Historical Figure Investment Lesson
Benjamin Franklin Understand the value of compound interest
Warren Buffet Invest in what you understand
Jesse Livermore Learn from your mistakes
J.P. Morgan Keep your emotions in check

History may not repeat itself, but it often rhymes. The wisdom of these historical figures still holds true today. It's up to us to learn from their experiences and apply their lessons in our investment journey.

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