Billionaire Warren Buffett started investing when he was a schoolboy and often emphasises the benefit of taking a very long-term view when it comes to investing.
So, for investors in their 40s, 50s or even older, might there be less relevance to learning from the Sage of Omaha than if they had started younger?
No. Even for someone with more than a few grey hairs, I think it can be practically useful to learn from Warren Buffett.
Bear in mind that Buffett’s investment in Apple — one that resulted in profits of tens of billions of dollars – only began a decade ago, in 2016. At that point, Warren Buffett was already 85!
Don’t let fear lead you into poor decision-making
Sometimes, when people think that they are investing too late – for example just a few years before they are due to retire – they can try to overcompensate.
They may put money into shares that are higher-risk than they feel comfortable with, hoping stronger returns could make up for lost time.
But that can be a recipe for disaster. Instead of making lots of money in a short time, the bigger risk could come back to bite them.
Warren Buffett has often said that some of his worst investing choices were made when he felt under some sort of pressure. That can be external pressure, but it can also be the pressure from your own ego.
Just because time may not feel like it is on your side is not a good reason to abandon your normal investing standards.
Focus on proven business models
For some investors with many decades of active investing still ahead of them, racy growth stocks can be attractive.
Even as a young man, that was not Warren Buffett’s style of investing. He preferred sticking to established businesses that had already proven their business model could be profitable.
With the clock ticking on the run down to retirement – even if it is still a couple of decades away – I think it makes good sense for an investor to consider whether a business has already proven itself, rather than hoping it may do so at some future point.
Stick to what you understand
One benefit of being middle-aged (or older) is having garnered a lot of life experience.
That can be an asset when it comes to investing.
Warren Buffett always aims to stick to businesses he understands when investing. Someone with decades of adult life under their belt already ought to understand several areas well.
For example, I recently invested in Campbell’s (NASDAQ: CPB).
The eponymous soup maker is a company I feel it is fairly easy to understand. I am used to its products, including the soups but also other product lines like Pepperidge Farm biscuits.
I see the food business as fairly easy to understand in terms of what levers the company can pull to try and improve revenues or profitability.
One risk – explaining why the share price has more than halved in five years – is changing food tastes. The packaged, processed foods associated with Campbell’s are increasingly out of fashion.
Still, the company’s strong brand portfolio could help it retain customers while evolving its product offering and lead to a higher share price further down the line.
Meanwhile, the share price fall has pushed the dividend yield up to 7.5%.
