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The key takeaways from "Invested" that are actionable for individual investors include understanding the importance of value investing, following Warren Buffett's approach, and learning how to build an investment portfolio. The book emphasizes on buying when the price gives you a margin of safety. It introduces two pricing methods: the ten cap pricing method which requires a high return and thus a low buying price, and the payback time pricing method which aims to get your money back in eight years. It also stresses on the importance of calculating a valuation method that has a margin of safety built in, similar to the Discounted Cash Flow Analysis.
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This is based on earnings and is how you calculate the value of the company. You should only buy when the price gives you a margin of safety; the ten cap pricing method requires a high return so it requires a low buying price (a nice big margin of safety), while the payback time pricing method gets you your money back in eight years. Finally, you have to calculate a valuation method that has a margin of safety built in. This is a variation on what accountants call Discounted Cash Flow Analysis.
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Do you long for the day when you can work less and travel more? Do you fear that you’ll never have enough money to be able to retire? By following War...
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