Warren Buffett is arguably the greatest investor of our generation, perhaps even in history. Buffett is also a champion of leadership and personal development, sharing a treasure trove of advice to improve our lives.

One piece of advice is a rule Warren Buffett calls the key to his success -- a rule founded on a key principle of finance that he follows religiously. The rule? 

Go to bed a little smarter each day.

That's the Buffett formula. As simple as it sounds, it operates on the power of compounding interest. Within a few years, it starts to yield results. "That's how knowledge builds up. Like compound interest," he once succinctly noted. 

Practicing the Buffett formula

Over the span of your lifetime, the Buffett formula should give you an advantage, as it has Buffett. And the best way to launch it into daily practice is to do what Buffett does every day: Read.

A lot.

Buffet's infamous reading habit is what he attributes as the foundational tool to improve knowledge. He is a voracious reader who spends 80 percent of his own day reading, and he suggests that anyone hoping to achieve similar success should read 500 pages per day.

That also means making the time to read. "I read and think," Buffett once said. "So I do more reading and thinking, and make less impulse decisions than most people in business. I do it because I like this kind of life."

He's not alone. 

Bill Gates reads about 50 books per year​. ​Mark Cuban reads more than three hours a day. Elon Musk? ​When asked about how he learned to build rockets, he said, "I read books."

Buffett doesn't limit building up his knowledge to books alone. He reads six newspapers a day, including The Wall Street Journal, Financial Times, The New York Times, USA Today, Omaha World-Herald, and American Banker.

Whether or not you have time for such an ambitious goal is largely irrelevant. The point of the Buffett formula is to make whatever progress you can. Few of us can actually squeeze in a 500-page goal with our busy schedules. But most of us, with some intentionality, can fit in 15 pages, maybe 20 pages each day, improving our level of knowledge in the process. 

Published on: Feb 10, 2020
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