3 easy ways to invest like Warren Buffett

New to investing and don’t know where to start? Legendary investor Warren Buffett could set you on the road to riches.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

You don’t live to be 88 and amass a multibillion-dollar stock market fortune without accumulating considerable knowledge about investing. Warren Buffett — a.k.a. the Sage of Omaha — has become a legend in his own lifetime due to his longevity and success.

If you’re looking to start investing in the stock market, here are three simple investments that could enable you to benefit from Buffett’s wealth of wisdom.

Inflation Is Coming

Inflation is out of control, and people are running scared. But right now there’s one thing we believe Investors should avoid doing at all costs… and that’s doing nothing. That’s why we’ve put together a special report that uncovers 3 of our top UK and US share ideas to try and best hedge against inflation… and better still, we’re giving it away completely FREE today!

Click here to claim your copy now!

Buffett’s Berkshire

The most immediate way to align yourself with Buffett is to buy shares in his investment company, Berkshire Hathaway  (NYSE: BRK.B), which is listed on the New York stock exchange. With a market value of over $500bn, Berkshire is one of the top stocks in the S&P 500 — an index of 500 of the US’s biggest companies. Over the last 53 years, Buffett has increased Berkshire’s value at an annualised rate of a bit over 19%.

Berkshire owns, or has a controlling stake in, a number of private businesses, but also has investments in a range of stock market-listed companies, including American Express, Apple and The Coca-Cola Company. Of course, one consideration for investors today is that Buffett is no spring chicken and — when the time comes — there can be no guarantee Berkshire will be as rewarding under the management of his successors.

Britain’s Buffett

One alternative — and an attractive one for UK investors, in my view — is to buy shares in London-listed Finsbury Growth & Income Trust  (LSE: FGT). This investment company’s portfolio has been managed for the last 18 years by Nick Train, who has been dubbed “Britain’s Warren Buffett,” due to his devotion to investing by Buffett’s fundamental principles. Finsbury’s annualised return over the last 10 years has been just under 19%.

Many of the companies Train invests in are recognisably ‘Buffett-type’ stocks — that’s to say, they have certain business and financial characteristics that Buffett looks for. Indeed, one of Train’s biggest holdings, Unilever, was the subject of an attempted takeover last year by Buffett-controlled Kraft Heinz. Other top stocks in Finsbury’s portfolio include drinks giant Diageo, financial services company Hargreaves Lansdown and fashion house Burberry.

Buffett’s bequest

Buffett has said many times that he believes (and there’s plenty of data to support it) a low-cost index-tracking fund will deliver superior returns to those achieved by most investors, whether private or professional. In fact, in a bequest in his will for the benefit of his wife, he has advised the trustee to invest 90% of the cash in an S&P 500 index fund.

Such funds simply mirror the return of the index, less a small annual management charge. S&P 500 trackers are available in the UK. This index has been a strong performer historically (an annualised return of 17% over the past 10 years), but other options, including the FTSE 100 (11% annualised return) or FTSE World (14%) could also be worth considering.

Finally, while it’s unlikely you’ll ever come close to achieving the level of wealth Buffett has accumulated in his lifetime, history shows that long-term investing in the stock market makes financial independence a realistic goal for many people. Furthermore, as a general rule, the sooner you get started, the better.

Is this little-known company the next ‘Monster’ IPO?

Right now, this ‘screaming BUY’ stock is trading at a steep discount from its IPO price, but it looks like the sky is the limit in the years ahead.

Because this North American company is the clear leader in its field which is estimated to be worth US$261 BILLION by 2025.

The Motley Fool UK analyst team has just published a comprehensive report that shows you exactly why we believe it has so much upside potential.

But I warn you, you’ll need to act quickly, given how fast this ‘Monster IPO’ is already moving.

Click here to see how you can get a copy of this report for yourself today

G A Chester has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Apple, Berkshire Hathaway (B shares), and Unilever. The Motley Fool UK has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool UK has recommended Burberry, Diageo, and Hargreaves Lansdown. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Should you invest the value of your investment may rise or fall and your Capital is at Risk. Before investing your individual circumstances should be considered, so you should consider taking independent financial advice.

More on Investing Articles

Woman pulling baffled face
Investing Articles

Can I trust Lloyds’ 6.1% dividend yield?

The Lloyds' share price has sunk in 2022, causing the bank's dividend yield to leap. But can I really trust…

Read more »

Young mixed-race woman looking out of the window with a look of consternation on her face
Investing Articles

3 top stocks to buy before the market rebounds

Edward Sheldon highlights three beaten-up stocks he'd buy before global stock markets stage a recovery from their 2022 declines.

Read more »

Happy young female stock-picker in a cafe
Investing Articles

I’d drip-feed £300 a month into my Stocks and Shares ISA to aim for million

Investing regularly via a Stocks and Shares ISA is a simple way of possibly reaching a million-pound portfolio. Zaven Boyrazian…

Read more »

young woman celebrating a victory while working with mobile phone in the office
Investing Articles

Is this penny stock on track for an explosive recovery in 2022?

Investing in penny stocks is a risky endeavour. But it can also deliver gigantic returns for a prudent investor like…

Read more »

Close-up of British bank notes
Investing Articles

Secrets of the world’s most successful passive income investors

Here's how it's possible to secure a healthy long-term passive income stream, based on a few simple principles gathered from…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

Down 50%, will the Royal Mail share price bounce back?

The Royal Mail share price has halved in value in the last year. After such a decline, is it now…

Read more »

Partnership of business concept.
Investing Articles

Director dealings: Marks and Spencer, Cranswick, Homeserve

Director dealings can indicate whether a company's doing well. So, here are this week's biggest insider transactions at three FTSE…

Read more »

Cheerful young businesspeople with laptop working in office
Investing Articles

Best British growth shares for July

We asked our freelance writers to share the top growth shares they’d buy in July, which included data firms and…

Read more »