The Motley Fool

Here’s how I think Warren Buffett would invest £1,000 in FTSE 100 stocks right now

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

close-up photo of investor Warren Buffett
Image source: The Motley Fool

Warren Buffett is one of the greatest investors of our generation, with a net worth over $100bn. One of the points that makes him so compelling to listen to is his wealth of experience. After all, he’s been investing for over 70 years. He’s been successful during this period as well, and he has seen crashes come and go, boom periods and wild rides in the market. Given his investing philosophy, here’s what I think he might do with £1,000 right now.

Warren Buffett’s nuggets of wisdom

As a large disclaimer before we get going, I have not spoken to Warren Buffett and so cannot say for certain that this is what he would do! But what I can do is look at the advice he has given in the past and apply that to today.

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...

For example, Buffett once commented that “risk comes from not knowing what you’re doing”. So when it comes to investing £1,000 into FTSE 100 stocks, I need to do my homework. Randomly picking stocks could present a high risk as I wouldn’t know why I was investing in them specifically.

So before he might make any investments, he’d make sure that he’d read up on the company. I agree. I want to be comfortable with the outlook and also happy that I can afford the amount that I’m thinking of investing.

From here, I look to apply his advice when he mentioned that “it’s not necessary to do extraordinary things to get extraordinary results”. Particularly with the retail investing boom of the past couple of years, I think many investors try and overcomplicate things. 

Although I wouldn’t simply buy a FTSE 100 tracker with my £1,000 to get extraordinary results, I wouldn’t try and be too clever either. Buying half a dozen stocks from a mix of different sectors should give me the opportunity to have a shot at beating the index.

Staying nimble

Finally, I actually think that Warren Buffett would keep a small amount of the £1,000 in cash, waiting for opportunities. This is based on the most famous quote of his that investors should be “fearful when others are greedy and greedy when others are fearful”.

At the moment, I don’t think investors in the FTSE 100 are fearful or greedy. But as the stock market crash last spring showed, things can change very quickly. Therefore, keeping some cash on the side in case we see another market blip is a good idea. When others become fearful and panic-sell stocks, it often can lead those stocks to be undervalued. With liquid cash, this can allow me to be greedy and snap them up.

There are other elements that I’m sure Warren Buffett would want to include in a FTSE 100 stock portfolio. But in terms of some guiding principles, I think his quotes give me a good idea of where to begin.

Is this little-known company the next ‘Monster’ IPO?

Right now, this ‘screaming BUY’ stock is trading at a steep discount from its IPO price, but it looks like the sky is the limit in the years ahead.

Because this North American company is the clear leader in its field which is estimated to be worth US$261 BILLION by 2025.

The Motley Fool UK analyst team has just published a comprehensive report that shows you exactly why we believe it has so much upside potential.

But I warn you, you’ll need to act quickly, given how fast this ‘Monster IPO’ is already moving.

Click here to see how you can get a copy of this report for yourself today

jonathansmith1 has no position in any 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

Renowned stock-picker Mark Rogers and his 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 click below to discover how you can take advantage of this.