The Motley Fool

No savings at 40? I’d use the Warren Buffett/Charlie Munger method to get rich

Image source: The Motley Fool

Warren Buffett and Charlie Munger are two of the most successful investors of all time. Together, they’ve turned Berkshire Hathaway into one of the most valuable companies in the world.

Interestingly, they’ve achieved this goal through a relatively simple investment strategy that can be replicated by almost any investor.

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...

In fact, through focusing on value opportunities and investing for the long term, it’s possible to build a surprisingly large retirement portfolio – even from having no savings at all at age 40.

Warren Buffett and Charlie Munger’s value investing approach

Warren Buffett and Charlie Munger seek to buy high-quality companies when they trade at fair prices. As such, they don’t necessarily purchase the cheapest shares that are available at any point in time. Nor are they willing to pay a high price for even the most attractive businesses.

Rather, they aim to identify companies that have a competitive advantage versus sector peers. Then they purchase them when their share price trades at a discount to intrinsic value.

Clearly, determining a company’s intrinsic value, or real worth, is very subjective. So too is deciding whether a company is high quality or not. However, through assessing a specific sector and building up knowledge about the companies that operate within it, it’s possible to identify the most attractive stocks.

Waiting for buying opportunities can be tough, but certainly profitable, in the long run as they deliver capital growth from a low share price.

In today’s market, a number of strong businesses appear to trade at attractive prices after the 2020 stock market crash. As such, there may be opportunities for investors to follow Warren Buffett and Charlie Munger’s strategy to generate high returns in the long run.

A long-term approach to investing

Of course, the pair have built Berkshire Hathaway to its current size over many decades. They have relied on a system of compounding to turn attractive returns into a vast portfolio. They’ve also been able to overcome various market declines simply by adopting a tried-and-tested buy-and-hold strategy.

An investor aged 40 is likely to have sufficient time to do likewise. Certainly, they may not end up with a portfolio valued in the billions. However, even obtaining a similar return to that of indices such as the S&P 500 or FTSE 100 can turn a modest investment into a large sum.

For example, assuming an 8% annual return over a 25-year time period would mean a total return of around 600%.

Therefore, investing today using a similar approach to that followed by Warren Buffett and Charlie Munger could be a sound move. It may enable an investor to turn a modest initial gains into a surprisingly large portfolio. And that means they can enjoy greater financial freedom in older age.

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.

Where to invest £1,000 right now

Renowned stock-picker Mark Rogers and his select team of expert analysts at The Motley Fool UK have just revealed 6 "Best Buy" shares that they believe UK investors should consider buying NOW.

So if you’re looking for more top stock ideas to try and best position your portfolio in this market, then I have some good news for your today -- 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.