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Warren Buffett's advice for avoiding major mistakes: 'Write your obituary and figure out how to live up to it'

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Each spring, investors in multinational conglomerate Berkshire Hathaway flock to the firm's annual shareholder meeting. Some attend in the hopes of getting a clearer picture of the fundamentals of the business they're invested in.

The majority, though, are there to hear from 92-year-old chairman and CEO Warren Buffett, who, in his enormously successful, decades-long career has become an icon of the investing world — someone who can tell us not only how to make more money, but also how to live a better life. They don't call him the Oracle of Omaha for nothing.

In his annual letter to shareholders this year, Buffett posited that much of his firm's success resulted from his and his colleagues' avoidance of "major mistakes." When asked at Saturday's meeting how to avoid such mistakes in investing and in life, Buffett offered a thoughtful response.

"You should write your obituary and figure out how to live up to it," he said. Elaborating further, Buffett laid out a blueprint for how to avoid the sorts of mistakes that can derail you, either financially or personally.

Avoid money mistakes 'that take you out of the game'

When it comes to your money, Buffett says the kind of mistakes that can hurt you are the ones that could shake up your financial plans and goals.

"You just want to make sure you don't make any mistakes that will take you out of the game or come close to taking you out of your game," he says. "You should never have a night when you're worried about investing."

For most investors, that likely means investing in line with your tolerance for risk and avoiding putting too much money in any one, risky investment. By spreading your bets across a widely diversified portfolio, you help mitigate the risk of a "game-changing" slide in any one particular investment.

And by making sure you're not taking on more risk than you're comfortable with, you keep yourself from tossing and turning over the possibility of a decline in your portfolio.

Beyond that, Buffett urges people to keep it pretty simple.

"You should spend a little bit less than you earn. And you can spend a little bit more than you earn. [But] then you've got debt and the chances are you'll never get out of debt," he said. "I'll make an exception in terms of a mortgage on your house."

By eschewing debt, Buffett says, you avoid putting yourself at a mathematical disadvantage with your money. To come out on top while owing credit card debt of 12% or 14%, you'd have to earn even more than that on your investments, Buffett says. "If you can do that, come to Berkshire Hathaway."

Buffett's math may even be a little generous. Historically, the S&P 500 has offered an annual return in the ballpark of about 10%. And thanks to a series of interest rate hikes from the Federal Reserve, the average annual rate on credit card debt stands at more than 20%, according to Bankrate.

'Tell someone to go to h--- tomorrow'

When it comes to avoiding mistakes in life, Buffett shared advice he received from longtime friend and business partner Tom Murphy.

"Always tell someone to go to h--- tomorrow. Well, that was great advice then, and think about what great advice it is when you sit down at a computer and screw your life up forever by telling someone to go to hell, or something else, in 30 seconds and you can't erase it."

In other words, you may very much want to give people a piece of your mind, but there's a serious risk that you could do damage to your own reputation. You'd be wiser to let yourself cool off, or, in the case of the internet, avoid creating a permanent record of poor, impulsive behavior.

Returning to the idea of considering your legacy, Buffett offered another key way to avoid mistakes: Be kind.

"I've never known anybody that was basically kind that died without friends. I've known plenty of people with money who died without friends, including their family."

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