The Motley Fool

£2k to invest? I’d follow Warren Buffett to get rich

Image source: The Motley Fool

If you have £2k or any other amount to invest, then following Warren Buffett’s investment advice could be a sensible decision. 

Warren Buffett is considered by many to be the world’s greatest investor. He didn’t get to this position by accident. The billionaire has spent decades carefully selecting stocks and buying companies. 

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...

At the core of his strategy, there are a few key rules that have never changed. By following these rules, you may be able to increase the size of your financial nest egg. 

Warren Buffett’s rules 

The legendary investor’s first rule of investing is to avoid losing money at all costs. This simple rule reflects Buffett’s desire to avoid investing in any companies that might see their shares fall to zero. To do this, he only buys companies he understands. And if he does not understand a particular business or sector, he stays away. 

Warren Buffett also avoids buying any complex financial instruments. He will avoid things like commodities, and forex trading as these markets can be volatile and unpredictable. 

Another rule the super-investor lives by is buying for the long term. Over the past 100 years, UK stocks have returned around 6% after inflation. All you would need to do to achieve this return is to buy an index fund, sit back and relax. 

Warren Buffett understands that the stock market should produce steady positive returns over the long term. Even though it might see periods of volatility, over a time frame of several decades, returns are generally positive.

With this being the case, Buffett does not try to trade. Instead, he buys and holds stocks for the long run. As well as reducing the cost of trading, it also means he’s less likely to pick a dud stock. 

The billionaire’s long-term mentality means some stocks have featured in his portfolio for many decades. This is another bit of advice we can learn from Warren Buffett. If something works, it makes sense to stick with it. If you’ve found a stock or fund that has produced great returns in the past, it could be best to stay invested with the firm for the long haul.

While past performance does not guarantee future success, a well-managed, high-quality company may continue to earn attractive returns for investors year after year. 

Index fund

Warren Buffett has issued plenty of advice on picking stocks in the past. However, he’s also said that if you’re struggling to understand the market, buying a simple index fund that tracks the market might be the better options. This might be the best strategy for investors with only a small sum to invest today.

Picking stocks can be a time-consuming process, and costly if you get it wrong. Therefore, if you’re not sure, it may be best to follow Warren Buffett’s advice and buy a simple market tracker fund instead. 

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.

Rupert Hargreaves owns no share 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.

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.