The first and the most important investing principles of legendary Investors like Benjamin Graham and Warren Buffett is Saving and Investing Money.
With the passage of time the term 'Money' has become one of the most important necessities of everybody's life,without which thinking about anything is next to impossible.
Its importance can be compared to the blood in human's body.
Today with the increasing human wants, longer life spans, and huge number of opportunities available to spend, just earning good is not enough; it is equally important to save and invest your money wisely to ensure that it is generating a good return and securing yours and your family's future.
Wealth accumulated by saving and investing money not only provides a safety net but also allows you to achieve your life goals like buying a dream house or a car, etc
Many people (especially youngsters) spend their savings on unnecessary luxury without leaving some of their earnings for a rainy day. This can be a disastrous habit to possess.
Recently, during the COVID-19 Pandemic, this habit of not saving enough money proved to be disastrous for many people.
Warren Buffett often signifies the importance of savings and avoidance of unnecessary spending through some of his famous quotes -
Do not save what is left after spending; instead spend what is left after saving.
"If you buy things you do not need, soon you will have to sell things you need."
Let me explain this with a hypothetical example of buying Apple shares instead of its luxury iPhone.
The first iPhone came out on June 29, 2007 when it cost US $ 499. Just imagine, instead of buying that phone you bought any other smart phone say which cost you US $200 and invested balance amount in buying shares of Apple company then that investment of US $299 would be worth not less than US $ 4800 (as on 30th April 2020). This does not include the dividend paid by the company over the years.
Warren Buffet also emphasizes a lot on developing a habit of saving and investing from a young age i.e., as soon as possible. He himself started investing at an age of 11. In his letter to shareholders of Berkshire Hathaway in 2018, Buffett wrote -
"On March 11th, it will be 77 years since I first invested in an American business. The year was 1942, I was 11, and I went all in, investing $114.75 I had begun accumulating at age six. What I bought was three shares of Cities Service preferred stock. I had become a capitalist, and it felt good."
One of the most important reasons for starting early is Power of Compounding. It is the process by which a sum of money grows exponentially over a period of time.