5 Great Warren Buffett Quotes That All Retirees Should Read

World-famous investor Warren Buffett is a unique personality. The chairman and CEO of Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) is probably as close to a celebrity as you'll find on Wall Street. Despite the 94-year-old's net worth exceeding $150 billion, his lifelong investing career and skill at distilling wisdom into common-sense jargon have produced a list of timeless quotes.

Some of Warren Buffett's best nuggets can benefit retirees. Handling your investments and finances is crucial in retirement because your income is limited as you age and can no longer work. Here are five wise quotes from Mr. Buffett that all retirees should read.

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1. "You want to be greedy when others are fearful. You want to be fearful when others are greedy."

This famous quote is excellent for any retiree who is still actively investing. People often let prices dictate their feelings and decisions on stocks. People chase expensive stocks because rising prices make them feel good and validated for buying. On the other hand, plunging stock prices cause emotional distress. Many people want to sell and get out to avoid the pain of loss when prices drop. As a result, many investors buy high and sell low, which is the opposite of what they should do.

In its simplest definition, the stock market is a pool of millions of buyers and sellers who experience emotional responses to a complex and unpredictable world. It creates a boom-and-bust cycle in the market where sentiment can reach extreme highs and lows. If you study the market's most famous index, the S&P 500, you'll often find that it frequently bottoms when adversity and emotional distress are the worst. Buffett has navigated the markets for many decades, and this quote neatly encapsulates his experience.

2. "Someone's sitting in the shade today because someone planted a tree a long time ago."

It can be difficult for people to grasp the impact compounding has on your investments over time. Our brains want to think linearly, in a straight line. However, compounding works exponentially; the longer it goes, the faster and larger the numbers become. That's why people should begin investing as soon as possible: more time means more money later.

Buffett's quote is a metaphor for compounding. Investing doesn't take care of you immediately, but with consistency and time, you'll sit comfortably under the shade of your portfolio. Retirees don't have as much time as the young, but they have the wisdom to guide younger loved ones to get started.

3. "Buy into a company because you want to own it, not because you want the stock to go up."

It's easy to turn on the TV or your brokerage app and see stocks as letters and numbers that go up and down. But investing, in its simplest form, is about trading your money for a tiny sliver of ownership in real businesses. Short-term stock prices fluctuate along with the broader market. Over time, a company's business fundamentals, such as earnings, growth, financial health, and competitive moat, will dictate how the stock performs.

Buffett's ability to ignore price movement and think like a business owner has helped him build Berkshire Hathaway, a holding company with dozens of private businesses and stakes in public companies, to a $1.1 trillion market cap.

4. "When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever."

There are thousands of stocks to choose from, and picking correctly isn't easy. Relative to the many thousands of companies that have come and gone over time, a small fraction of winners has generated the lion's share of the stock market's returns over its lifetime. That's why Buffett emphasizes holding onto the winners when you find them.

Berkshire Hathaway has walked the walk. Buffett has held some of his best investments for decades, including Coca-Cola and American Express, and isn't afraid to cut bait when he feels he's wrong. Retirees should hold winning stocks for as long as the business fundamentals justify it. Nobody ever went broke taking a profit, but the right company can be almost as timeless as Buffett's quotes.

5. "The asset I most value, aside from health, is interesting, diverse, and long-standing friends."

Even if you're retired, you may be decades younger than Buffett, who, at 94, has lived a long and prosperous life. There's much experience and wisdom in his words. As I steadily age, I realize that my social circles will change. Parents won't always be around; children will grow up and start on their own life adventures.

Buffett's quote is a valuable reminder of this inevitable transition. Life is almost always busy, but investing in friendships can help nourish the soul as friends and loved ones who were around during our earlier years aren't around as much later in life. After all, having money is a lot more fun when you can enjoy your life with others.

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American Express is an advertising partner of Motley Fool Money. Justin Pope has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool has a disclosure policy.