Warren Buffett has a deserved reputation for being perhaps the best investor of all time.
Incredibly, if I’d invested just £1,000 with him in his company Berkshire Hathaway in 1983, I’d now have £514,890.
Those 40-year returns are spectacular, so I’m not expecting his advice to give me quite that much joy.
But his easy-to-follow tips could still help me build wealth even if I was starting with no savings at 30. Here are my favourite three.
1: Don’t chase bargains
“It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”
This is one of Buffett’s most famous quotes. He recommends buying into quality companies rather than cheap or undervalued ones.
A bargain basement price can offer a quick win, but a quality company can offer decades of market-beating returns.
Take Apple, for instance. In 2003, Steve Jobs’ company was an expensive buy. It traded at an extortionate-sounding 83 times earnings.
And yet the tech firm shot up 66,274% since then. Anyone who invested in this ‘wonderful company’ would have received over 600 times their money back.
That might not be a typical example, but if I was hunting for a bargain at the time, I would have probably turned up my nose at it.
2: Hold for 10 years
“If you aren’t thinking about owning a stock for 10 years, don’t even think about owning it for 10 minutes.”
This second piece of advice tells investors to only buy shares in a company for longer periods.
Compare this to trying to time the market or buy low, sell high – strategies that rely on predicting an irrational stock market.
In the first Covid wave, I remember the doomsayers predicting stocks would spiral downwards for years. But the FTSE 100 had recovered its February 2020 level by the end of the year.
This is why all my investments are only in companies that I’d hold for 10 years. And in my experience, these often get the best short-term returns too.
3: Invest in the right countries
“For 240 years, it’s been a terrible mistake to bet against America, and now is no time to start.”
I like this Buffett quote as it warns against a trap I fell into early on. When I started investing, I went heavily for developing countries as I thought they would ‘catch up’.
In reality. a country like the USA has a long history of producing great businesses. Coca-Cola, Mastercard and Pfizer are just a few.
He’s talking about his own country, but it’s true for us here in the UK too. This country has produced world leaders like Rolls-Royce, Unilever and Lloyds and I think it will continue to do so.
Lifetime strategy
These tips have helped me see solid success with my investments in stocks so far.
And while I’m not 30, this advice can help me pick wealth-building companies for the rest of my life.
