Lucky are we that an investing master like Berkshire Hathaway CEO Warren Buffett would sometimes impart a few pieces of advice to help people succeed not just at investing but also at life.
Case in point: Charlie Munger, vice chairman at Berkshire, shared one useful lesson from Buffett: the ‘20-slot rule’. Apparently, this was something that the billionaire liked to share when he lectured at business schools.
Let’s find out how that rule works.
The 20-Slot Rule
As Munger recalled during a 1994 commencement speech, Buffett would tell his MBA students that he could improve their financial welfare with a 20-slot ticket. The slots represent the investments that they will ever make in their life.
Given those restrictions, Buffett would say that you’d end up thinking more about what you do with your chances. The goal is to make people better at selecting winning investments instead of wasting chances due to poor decision-making.
Buffett himself touched on the rule during one of his lectures. In that situation, he told his students about how they can bet on or get just 20 ideas during their whole life .
The catch though is that not all of these will be good except for maybe three to seven that would make them rich. This is how he illustrated that people can’t build wealth by working on a new idea day after day.
The Importance of Focus
This is where the importance of having focus comes in.
In fact, focus has been identified by Buffett and his billionaire friend Bill Gates as the most important factor that contributed to both of their successes.
It’s not hard to see why. Living in a world that’s full of distractions, especially now more than ever, we often get sidetracked with unfinished projects and ideas.
Unfortunately, it’s often the case that we take on an interest and focus on it for a few weeks only to find another project to work on.
Don’t Waste Your Slots
That said, our task now is to choose fewer tasks to focus our energy on so we can increase the odds of succeeding. This circles us back to Buffet’s advice of living life as if you only have a 20-slot punch card.
To conserve your limited slots at winning, take the time to really evaluate your life and what you want to do. Find something that you’re passionate about.
And once you do, go on a mission to master it.