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I think these tips from Warren Buffett could help you get rich

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Warren Buffett is considered to be one of the greatest investors of all time. Over the past 60 years, he has transformed an initial investment of $100,000 (admittedly a lot of money back then) into a conglomerate worth more than $500bn.

During this time, he has consistently beaten the market. When he was managing a hedge fund for his investors, Warren Buffett consistently reported returns of 20% or more per annum.

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Learning from the master

We can learn a lot from Warren Buffett’s investment style. He has developed and refined his strategy over the past six decades.

As well as making hundreds of billions of dollars for his investors, he has also made plenty of mistakes during this time.

However, the good news is, we can learn from these mistakes, so we don’t make them ourselves. Indeed, by following Warren Buffett’s advice, you can improve your chances of being able to make a fortune in the current stock market crash.

Advice from Warren Buffett

One of the main pillars of the great investor’s strategy is to be greedy when others are fearful. He likes to buy stocks when other investors are selling, as this is often when the best deals appear.

Buying stocks when the market is falling, might not seem like the best course of action. But the stock market has experienced many booms and busts over the past few decades.

Each time the market has recovered. On some occasions, it has taken as much as a decade for the market to recover, although this shouldn’t be an issue for long-term investors.

Avoid junk

Another Warren Buffett tip we can use to make money in the current stock market crash is to avoid junk.

Sometimes, companies are cheap because they deserve to be. Just because a stock has fallen 50% in a few weeks, doesn’t mean that it is a good deal.

The legendary investor has always emphasised buying quality over value. He likes to buy businesses if they are cheap, but only if they are good companies. If not, he will stay away.

Warren Buffett has also been known to pay a premium to invest in high-quality businesses if they have bright growth prospects.

Commodities can crush you

Throughout his career, Warren Buffett has only invested in a handful of companies that earn the majority of their income from the commodities business. He likes to stay away from the sector because it is so unpredictable.

No one can tell where the oil price or gold price will trade six months from now. That makes valuing commodity companies almost impossible.

As such, he likes to stay away from the sector altogether. Rather than chasing unpredictable commodities businesses, he would rather invest in predictable, high-quality companies that produce sought-after consumer goods.

The Warren Buffett way

Warren Buffett has made billions by investing in the stock market when others are selling. However, he’s always picked his investments carefully, and he stays away from unpredictable companies that have a lot of debt.

Following the same rules could help improve your financial prospects over the long run.

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Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

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