The Motley Fool

How I’d invest in cheap UK shares using Warren Buffett’s tips to retire rich

Image source: The Motley Fool

Warren Buffett has an enviable track record when it comes to investing money in cheap stocks. Yet, he’s become one of the wealthiest people in the world through using a relatively simple strategy to great effect.

At a time when the stock market crash has caused many cheap UK shares to become available, his disciplined approach and long-term view may be more relevant than ever in these unstable times.

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...

Indeed, it could lead to impressive returns in the long run that facilitate the building of a surprisingly large retirement portfolio.

Warren Buffett’s disciplined approach to investing money

Warren Buffett uses a disciplined strategy when investing money in stocks. He seeks to buy high-quality companies when they’re trading at prices that undervalue their long-term prospects. Should no such opportunities be available, he’s content in waiting for a time when they can be purchased.

Such a situation could be present right now. The stock market crash has caused a wide range of cheap UK shares to come into existence. However, it’s important to approach their purchase with a disciplined strategy that could lead to less risk and higher long-term returns. For example, it may mean avoiding the very cheapest shares due to their weak financial positions, or lack of a competitive advantage. Similarly, it may mean waiting for more attractive prices to come along for the very best FTSE 100 and FTSE 250 shares.

By using a Buffett-style disciplined approach, it’s possible to apportion capital more effectively. It may equate to investing in the very best opportunities from across the FTSE 100 and FTSE 250 after the stock market crash.

A long-term approach to buying cheap UK shares

Warren Buffett’s time horizon is also exceptionally long. It means that his portfolio has a vast amount of time to benefit from compounding. The end result has been exceptional growth in his wealth over recent decades.

Of course, holding stocks when they’re in profit can be a difficult process for any investor. There’s a temptation to sell out in favour of another investment. Similarly, holding stocks when they’re losing money is also a difficult process that can cause a significant amount of worry.

However, Warren Buffett’s long time horizon may be beneficial given current stock market conditions. There continues to be a very uncertain near-term outlook for cheap UK shares. For example, the threat of a second market crash is likely to persist due to economic uncertainty. Meanwhile, the recent recovery seen in the FTSE 100 and FTSE 250 could well realistically continue.

Therefore, taking a long-term view of stocks could be a logical strategy. It may improve a portfolio’s performance through allowing it time to benefit from compounding as a recovery gradually takes hold after the 2020 stock market crash.

A Top Share with Enormous Growth Potential

Savvy investors like you won’t want to miss out on this timely opportunity…

Here’s your chance to discover exactly what has got our Motley Fool UK analyst all fired up about this ‘pure-play’ online business (yes, despite the pandemic!).

Not only does this company enjoy a dominant market-leading position…

But its capital-light, highly scalable business model has previously helped it deliver consistently high sales, astounding near-70% margins, and rising shareholder returns … in fact, in 2019 it returned a whopping £150m+ to shareholders in dividends and buybacks!

And here’s the really exciting part…

While COVID-19 may have thrown the company a curveball, management have acted swiftly to ensure this business is as well placed as it can be to ride out the current period of uncertainty… in fact, our analyst believes it should come roaring back to life, just as soon as normal economic activity resumes.

That’s why we think now could be the perfect time for you to start building your own stake in this exceptional business – especially given the shares look to be trading on a fairly undemanding valuation for the year to March 2021.

Click here to claim your copy of this special report now — and we’ll tell you the name of this Top Growth Share… free of charge!

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.