How I’d aim to make millions the Warren Buffett way

Warren Buffett has built a $115bn fortune from investing, while giving away $55bn. Here are five lessons that I finally learned from this legend.

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.

Buffett at the BRK AGM

Image source: The Motley Fool

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Thanks to decades of share-buying, my wife and I had amassed enough assets to retire in 2021. But I love financial writing and she’s great at her job, so we keep working. I also know that if I’d listened to my guru Warren Buffett earlier, we’d have millions more pounds today.

Thanks to his success as an investor, Buffett’s fortune exceeds $115bn. As a committed philanthropist, he’s already donated $55bn to good causes — and plans to give away 99% of his pot.

What I’ve learned

Though I’ve read so much about Warren, it took me way too long to learn from him. Here are five ‘Buffett bullet points’ that I wish I’d absorbed earlier.

1. Don’t lose money

Investing is as much about avoiding losers as picking winners. Boy, have I backed some flops in my time: my three worst investments cost me around £1m. If I’d not bought this trio of losers, I’d have perhaps £2m+ more now.

My biggest failures were caused by investing too heavily in a favoured stock, so I had too much concentration risk. Never again. Today, I make sure our money is spread widely across companies, sectors and countries.

2. Bet big on America

Buffett has repeatedly warned investors: “Never bet against America.” How I regret not taking this advice to heart when young.

Nowadays, our family wealth is heavily skewed towards the US — including our global trackers, may of which are weighted 60% to 70% towards American stocks.

3. Buy businesses, not stocks

In my early years of investing, I behaved more like a gambler or trader than a proper investor. In this effort to ‘get rich quick’, I made many mistakes.

One fundamental Warren Buffett lesson I’ve now absorbed is to buy companies rather than shares. Now I behave like an owner by only buying into businesses that I’d be willing to own for, say, a decade. And it’s this boring, long-term approach that has delivered my best returns from investing.

4. Investing is a marathon, not a sprint

Chasing short-term gains when I was younger probably cost me more money than any other blunder. I’d buy shares, aiming to flip them for quick profits. Surprise, surprise, this tricky tactic kept backfiring.

Warren Buffett has said: “If you aren’t willing to own a stock for 10 years, don’t even think about owning it for 10 minutes.” This is my motto today when it comes to owning shares. I only buy stocks in solid businesses run by competent managers. And like Buffett, my ideal holding period is forever.

5. Don’t let a crisis go to waste

These days, I’m not afraid of stock-market crashes, because they give me opportunities to buy into sound businesses at rock-bottom prices. As Warren Buffett urged in October 2008: “Be fearful when others are greedy, and greedy when others are fearful.”

For example, during the Covid-19 crash of spring 2020, my wife and I poured everything into shares after the US and UK stock markets had crashed by a third. And the returns from this one brave bout of buying have been life-changing!

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 assessed. Consider taking independent financial advice.

Cliff D’Arcy has an economic interest in Berkshire Hathaway Inc shares. 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.

More on Investing Articles

Mixed-race female couple enjoying themselves on a walk
Investing Articles

A once-in-a-decade chance to get rich buying growth stocks?

We haven't seen a good spell for growth stocks for quite a few years now. But I reckon the signs…

Read more »

Young Asian man drinking coffee at home and looking at his phone
Investing Articles

The FTSE 100 is full of bargains! Here’s 1 stock I’m eyeing up

A weak economic outlook has hurt the FTSE 100. This Fool explains why she likes the look of this consumer…

Read more »

Investing Articles

2 no-brainer beginner FTSE 100 stocks to buy for my portfolio

Getting started with investing can be daunting. Here are two stocks for beginners to consider buying to build their first…

Read more »

Young black man looking at phone while on the London Overground
Investing Articles

2 recession-resistant UK shares investors should consider buying

Our writer details two UK shares she feels could withstand some of the ill-effects of the current malaise to provide…

Read more »

Tanker coming in to dock in calm waters and a clear sunset
Investing Articles

Glencore share price drops on results. Time to buy?

The Glencore share price wobbled a bit after a weak set of 2023 results. Here's why I have the stock…

Read more »

Mature Caucasian woman sat at a table with coffee and laptop while making notes on paper
Investing Articles

Big trouble in China sinks HSBC shares. Should I invest after record FY results?

HSBC shares have slumped following a disappointing end to 2023 for the FTSE stock. Royston Wild explains why this may…

Read more »

View of Tower Bridge in Autumn
Investing Articles

3 dirt cheap FTSE 100 shares to snap up today?

The FTSE 100 is rallying, but many shares still look super cheap on fundamentals. Is our writer buying these three…

Read more »

Black woman using loudspeaker to be heard
Investing Articles

FTSE 100 earnings: what can we expect from Rolls-Royce in 2024?

The Rolls-Royce share price tripled in 2023. Roland Head wonders whether this FTSE 100 stock could continue that impressive trajectory…

Read more »