My investment strategy in the last few years has been heavily influenced by my favourite investor, Warren Buffett. As I continue building wealth in 2024 and the years to come, I’m not deviating from this.
There’s a lot that retail investors can learn from the ‘Oracle of Omaha’. As a young boy, he started investing with a few dollars. Today, he’s one of the wealthiest people on the planet with a fortune of around $120bn.
Now, I’m not saying I’ll be able to reach the heights that Buffett has achieved in his eight decades of investing. But there’s certainly a lot that investors can take from him and use as motivation for their investment journey.
Buffett has averaged an annual return of 20% in the years he’s been investing. I’m attempting to do the same with these tips.
Focus on the bigger picture
In today’s world, there are a lot of adverts out there promoting the chance to ‘get-rich-quick’ through methods such as day trading. But Buffett ignores all that in favour of investing for the long term.
To be fair, I can see why. The stock market has proven time and time again that the most efficient way to benefit from it is to think in years and decades with investments, not days or weeks.
The market is volatile. And as great as it would be if it wasn’t, peaks and troughs are inevitable. Take the FTSE 100 as an example. In 2020 sawthe index fell by 15%. If I’d invested only for that year, the likelihood is I wouldn’t have seen success. However, since its inception in 1984, the index has returned 7% on average. That’s proof that playing the long game works.
Keep it simple
Another key piece of Buffett advice is to understand the businesses you’re buying. For both seasoned investors and those just starting, there is an abundance of businesses and industries to explore on the market. This can make investing rather confusing and seem like a nuanced process. However, Buffett likes to keep it simple.
He once said investors should be able to write down on a pad exactly why they plan to own that particular business. For me, being able to understand how the company generates revenue, as a starting point, is key to this. That’s why in my portfolio I own companies such as Barclays, Lloyds, and Safestore.
Seize opportunities
A final tip is to be ready to take advantage of opportunities that the market provides. Yes, the last few years have been volatile. Many stocks have taken a battering. But with that comes beatdown prices and undervalued shares. Buffett once said: “When it rains gold, put out the bucket, not the thimble”. There’s no time like the present to start investing.
Time to build wealth
I see 2024 being another difficult year for the market. But I’m ignoring all the short-term volatility. By using these methods, I’m confident I can continue to build my wealth in the years and decades to come.
