The Motley Fool

3 easy ways to invest like Warren Buffett

Image source: The Motley Fool

You don’t live to be 88 and amass a multibillion-dollar stock market fortune without accumulating considerable knowledge about investing. Warren Buffett — a.k.a. the Sage of Omaha — has become a legend in his own lifetime due to his longevity and success.

If you’re looking to start investing in the stock market, here are three simple investments that could enable you to benefit from Buffett’s wealth of wisdom.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

Buffett’s Berkshire

The most immediate way to align yourself with Buffett is to buy shares in his investment company, Berkshire Hathaway (NYSE: BRK.B), which is listed on the New York stock exchange. With a market value of over $500bn, Berkshire is one of the top stocks in the S&P 500 — an index of 500 of the US’s biggest companies. Over the last 53 years, Buffett has increased Berkshire’s value at an annualised rate of a bit over 19%.

Berkshire owns, or has a controlling stake in, a number of private businesses, but also has investments in a range of stock market-listed companies, including American Express, Apple and The Coca-Cola Company. Of course, one consideration for investors today is that Buffett is no spring chicken and — when the time comes — there can be no guarantee Berkshire will be as rewarding under the management of his successors.

Britain’s Buffett

One alternative — and an attractive one for UK investors, in my view — is to buy shares in London-listed Finsbury Growth & Income Trust (LSE: FGT). This investment company’s portfolio has been managed for the last 18 years by Nick Train, who has been dubbed “Britain’s Warren Buffett,” due to his devotion to investing by Buffett’s fundamental principles. Finsbury’s annualised return over the last 10 years has been just under 19%.

Many of the companies Train invests in are recognisably ‘Buffett-type’ stocks — that’s to say, they have certain business and financial characteristics that Buffett looks for. Indeed, one of Train’s biggest holdings, Unilever, was the subject of an attempted takeover last year by Buffett-controlled Kraft Heinz. Other top stocks in Finsbury’s portfolio include drinks giant Diageo, financial services company Hargreaves Lansdown and fashion house Burberry.

Buffett’s bequest

Buffett has said many times that he believes (and there’s plenty of data to support it) a low-cost index-tracking fund will deliver superior returns to those achieved by most investors, whether private or professional. In fact, in a bequest in his will for the benefit of his wife, he has advised the trustee to invest 90% of the cash in an S&P 500 index fund.

Such funds simply mirror the return of the index, less a small annual management charge. S&P 500 trackers are available in the UK. This index has been a strong performer historically (an annualised return of 17% over the past 10 years), but other options, including the FTSE 100 (11% annualised return) or FTSE World (14%) could also be worth considering.

Finally, while it’s unlikely you’ll ever come close to achieving the level of wealth Buffett has accumulated in his lifetime, history shows that long-term investing in the stock market makes financial independence a realistic goal for many people. Furthermore, as a general rule, the sooner you get started, the better.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US $12.3 TRILLION out of thin air…

And if you click here, we’ll show you something that could be key to unlocking 5G’s full potential...

It’s just ONE innovation from a little-known US company that has quietly spent years preparing for this exact moment…

But you need to get in before the crowd catches onto this ‘sleeping giant’.

Click here to learn more.

G A Chester has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Apple, Berkshire Hathaway (B shares), and Unilever. The Motley Fool UK has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool UK has recommended Burberry, Diageo, and Hargreaves Lansdown. 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

The renowned 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 enter your email address below to discover how you can take advantage of this.

I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.