The Motley Fool

How should I invest £10k? 2 reasons I’d follow Warren Buffett’s advice

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.

Young casual man and girl using laptop while looking at invoice and plan the budget to save.
Image source: Getty Images

If I had £10k to invest today, I’d follow Warren Buffett’s advice when selecting investments. Over the past six decades, Warren Buffett has established himself as one of the world’s greatest investors. During this time he’s owned thousands of stocks, and earned tens of billions of dollars in profits for himself and his investors. 

The billionaire has also developed something of an investing framework. He always follows this framework when considering any new investments for his portfolio. 

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

Click here to claim your free copy now!

Warren Buffett’s framework 

Buffett started developing his investment structure when he was at college. At the time, he followed the activities of Benjamin Graham, who was already an established investor. 

Graham believed that investors should view the shares they own as individual businesses. Stocks were pieces of real companies, he stated, not gambling chips in a casino. 

Warren Buffett has used this advice to guide his investing ever since. He only buys shares in corporations he knows well and understands. What’s more, he only buys shares in companies that he wants to own forever. 

I think following this advice is very sensible. Buffett has refined his mentor’s initial style over the years. However, it remains similar to this day.

A long-term portfolio 

If I had £10k to invest today, I’d follow Warren Buffett’s framework for investing. That means sticking with firms I understand, and only owning stocks I’d hold for the long term. 

There aren’t many businesses that meet these criteria. However, I don’t think that’s a bad thing. I don’t feel I’d be able to keep up with hundreds of shares. Buffett focuses his attention on just a few firms. That’s the strategy I follow as well. 

Some examples of the types of businesses that I believe fit into this framework include Britvic and AG Barr. Both of these firms are easy to understand and have strong brands. I’d be happy to hold both of these stocks for many decades as a result. 

Warren Buffett has also shown a preference for corporations like these in his portfolio. He has owned shares in drinks giant Coca-Cola for decades. He has previously said that the company’s strong brand and large profit margins are the key reasons why the business has been such a mainstay of his portfolio. Britvic and AG Barr don’t have the same brand recognition as Coke, but as UK alternatives, I think they’re highly attractive. 

The bottom line 

So, that’s the strategy that Warren Buffett has used to build his fortune over the past six decades. By following a similar approach, I think I can create a large financial nest egg utilising the stock market. It’s an approach that I believe anyone can follow by concentrating on high-quality businesses and holding these stocks for the long term. 

The high-calibre small-cap stock flying under the City’s radar

Adventurous investors like you won’t want to miss out on what could be a truly astonishing opportunity…

You see, over the past three years, this AIM-listed company has been quietly powering ahead… rewarding its shareholders with generous share price growth thanks to a carefully orchestrated ‘buy and build’ strategy.

And with a first-class management team at the helm, a proven, well-executed business model, plus market-leading positions in high-margin, niche products… our analysts believe there’s still plenty more potential growth in the pipeline.

Here’s your chance to discover exactly what has got our Motley Fool UK investment team all hot-under-the-collar about this tiny £350+ million enterprise… inside a specially prepared free investment report.

But here’s the really exciting part… right now, we believe many UK investors have quite simply never heard of this company before!

Click here to claim your copy of this special investment report — and we’ll tell you the name of this Top Small-Cap Stock… free of charge!

Rupert Hargreaves owns no share mentioned. The Motley Fool UK has recommended AG Barr and Britvic. 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.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.