Bill Gates Investment Advice – 10 Most Impactful Lessons
Bill Gates, the founder of Microsoft, is the fourth-richest man in the world today with an estimated net worth of $124 billion. While Microsoft’s success certainly contributed to that fortune, Gates has also put his earnings from building the modern PC to work through investing.
While you might not have billions of dollars to invest like Gates does, there are still important lessons to be learned from how Gates has grown his wealth. So, we’ll highlight 10 pieces of investment advice from Bill Gates that you can apply to your own investment approach.
Bill Gates Investment History
Bill Gates founded Microsoft in 1975, and as CEO of the company helped pioneer technology like the Windows operating system and Microsoft Office. When Microsoft went public in 1986, Gates sold $1.6 million worth of shares and retained a 45% stake in the company worth around $300 million. By 2000, Gates’ stake in Microsoft was worth around $100 billion.
Gates has since sold off the majority of his shares. While he doesn’t provide much public information about his investment portfolio, Gates’ investments have helped him maintain his fortune while giving away tens of billions of dollars through philanthropic efforts.
Bill Gates Investment Advice
Gates has offered insight into how to invest through interviews, speeches, and books over the past several decades. Below are 10 of the best pieces of investment advice from Bill Gates.
1. Invest in Education
Although Gates himself dropped out of Harvard University at 19, he’s quick to point out the value of education. The median income of college graduates is 57% higher than the median income of high school graduates, which translates into a huge increase in lifetime earnings.
So, when Gates was asked about the number one piece of financial advice he would offer for people who make $100,000, his response was simple: “Invest in your education.”
2. Measure Your Progress
The purpose of investing is to reach a financial goal, whether that’s buying a home, saving enough to retire, or helping your children pay for college. But it’s easy to lose track of your goal during the process of investing, which makes it hard to know if you’re headed in the right direction.
That’s why Gates emphasizes the importance of creating measurable milestones or finding another way to track progress towards your investing goal. “You can achieve amazing progress,” he says, “if you set a clear goal and find a measure that will drive progress toward that goal.”
3. Take Control of Your Own Fate
Gates is also a believer in self-reliance. He says that “if you were born poor it’s not your mistake, but if you die poor it’s your mistake.”
By this, Gates means that you need to take control of your own fate. Learn how to invest and consistently put money into the market to grow it. While not everyone has the same means as Gates, every investor does have the power to build on what they have.
4. Practice Patience
Gates counts Warren Buffett as a close friend, so it should come as little surprise that the two share some ideas about long-term investing. Specifically, Gates tells investors that “patience is a key element of success.”
Instead of buying and selling stocks in the hope of making a quick return, invest in quality companies and plan to leave them in your portfolio for years. Results may not be visible overnight, but Gates believes this patient strategy pays off in the long run.
5. Grow from Your Mistakes
Making a mistake is a natural part of investing. But making the same mistake twice isn’t. Learning from investments that went wrong and making better decisions in the future is a key element of growing as an investor and building your wealth over time.
As Gates put it, “it’s fine to celebrate success, but it is more important to heed the lessons of failure.”
6. Be Willing to Take Risks
Bill Gates isn’t known as a particularly aggressive investor. However, he tells investors that “to win big, you sometimes need to take big risks.”
Ideally, these should be calculated risks and big bets should be few and far between. However, when you do spot a once-in-a-lifetime opportunity, commit to it.
7. Work Hard, Especially When You’re Young
Gates famously said that he “never took a day off in [his] twenties. Not one.” While that’s hardly feasible for most of us, it points to an important concept for investors to remember: money you invest when you’re young is worth more over your lifetime than money you invest when you’re old.
That means that it’s worth investing as much as possible in your twenties and thirties. Stick to a budget, invest in yourself to grow your income, and do whatever it takes to grow your investment portfolio early on.
8. Use Optimism as a Guide
“Optimism is often dismissed as false hope,” says Gates, “but there is also false hopelessness.” Starting your approach to investing from a place of optimism encourages problem-solving and creative thinking.
In addition, the optimism that Gates encourages provides a rationale for investing in the first place. If you’re optimistic about the future, you have many reasons to create goals and to strive to reach them.
9. Be Prepared for Bad Times
Gates has been one of several prominent investors warning that the 2020’s could mark a shift in investment returns from recent decades. In 2019, Gates suggested that there are “reasons to think absolute returns for the next decade will be less than they have been for the last several decades.”
Gates was talking specifically about investments in bonds and treasury bills, which have seen deflated returns due to historically low interest rates. However, his warning is a reminder to investors that it’s always important to keep a rainy-day fund and to remain flexible in the face of changing market conditions.
10. Don’t Be Tricked by Success
Although Gates is one of the most successful businessmen in modern history, he warns that success can be misleading. “Success is a lousy teacher,” he says, because “it seduces smart people into thinking they can’t lose.”
While profitable investments are worth celebrating, it’s important to remain humble and to look critically at your successes.
Conclusion: Bill Gates Investment Advice
Bill Gates is the fourth-richest person in the world and has invested over $120 billion in wealth. With his investment advice, Gates encourages investors to remain forward-looking and take a long-term approach to reaching big financial goals.