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Warren Buffett is well known for his buy-and-hold investing strategy, and making solid bets on low-performing stocks when others are selling at a loss.<\/p>\n
At his company\u2019s annual meetings, Berkshire Hathaway\u2019s shareholders have the opportunity to pick Buffett\u2019s brain on any number of topics.<\/p>\n
Top Picks <\/p>\n
One investor who attended the conference in 1999 cut right to the chase in a memorable way. \u201cMr. Buffett, how can I make $30 billion dollars?\u201d he asked (1).<\/p>\n
As always, the Oracle of Omaha conveyed complicated theories in simple terms \u2014 rules that can guide any investor.<\/p>\n
\u201cIf I were getting out of school today and I had $10,000 to invest \u2026 I probably would focus on smaller companies \u2026 You have to buy businesses, or little pieces of businesses called stocks, and you have to buy them at attractive prices, and you have to buy into good businesses.\u201d<\/p>\n
If you want to learn the ropes that helped the nonagenarian accumulate a massive fortune, here are three of his fundamental rules to consider.<\/p>\n
1. Understand your circle of competency <\/p>\n
Tom Watson Sr., the founder of IBM (NYSE:IBM), once said, \u201cI\u2019m no genius. I\u2019m smart in spots \u2014 but I stay around those spots (2).\u201d That\u2019s the mantra Buffett has applied to his investing, too.<\/p>\n
By focusing on industries he understands and avoiding temptation to chase trends, Buffett has built his fortune through a disciplined and patient approach.<\/p>\n
His strategy, however, comes with an important caveat: volatility. At the 2020 Berkshire Hathaway shareholder meeting, Buffett reminded investors of the inevitable ups and downs.<\/p>\n
“You\u2019ve got to be prepared, when you buy a stock, to have it go down 50% \u2014 or more \u2014 and be comfortable with it, as long as you\u2019re comfortable with the holding,” he said (3).<\/p>\n
Read More: Robert Kiyosaki warned of a ‘Greater Depression’ \u2014 with millions of Americans going poor. Was he right?<\/a><\/p>\n Construct your circle <\/p>\n You can build your own circle of competency with trusted advisors who bring their expertise on growing wealth \u2014 and Advisor.com can help you find a financial professional<\/a> that\u2019s right for you.<\/p>\n Advisor.com is a free online platform that connects you with vetted financial advisors. Just answer a few quick questions about yourself and your finances, and the platform will match you with experienced financial professionals best suited to help you develop a plan to achieve your financial goals.<\/p>\n You can view the advisors\u2019 profiles, read past client reviews, and schedule an initial consultation for free<\/a> with no obligation to hire. There is also an accessible family office option for established investors with larger portfolios.<\/p>\n 2. Start young <\/p>\n Buffett\u2019s best advice for investors is to get started as early as possible. He has a simple metaphor to explain his wealth-building strategy.<\/p>\n \u201cWe started with a little snowball on top of a very tall hill,\u201d he said (1). \u201cWe started at a very early age in rolling the snowball down, and of course, the nature of compound interest is that it behaves like a snowball.\u201d<\/p>\n Indeed, the length of Buffett\u2019s career is a key piece of his enormous wealth. He bought his first stock at the age of 11 and is still actively investing.<\/p>\n In fact, the majority of Buffett\u2019s wealth was accumulated after he turned 65. In 1999, his net worth was just $30 billion. Today, it\u2019s nearly five times greater at about $150 billion, as per Bloomberg (4).<\/p>\n Begin investing today <\/p>\n One of the easiest ways to invest is to open a self-directed trade account with SoFi<\/a>. This DIY approach allows you to invest with no commission fees, plus, for a limited time, you can get up to $1,000 in stock when you fund a new account.<\/p>\n SoFi<\/a> is designed to help you learn investing as you go, with real-time investing news, curated content and the data you need to make smart decisions about the stocks that matter most to you.<\/p>\n Squirrel away your spare change <\/p>\n But what if you don\u2019t have Buffett\u2019s hypothetical $10,000 to start with?<\/p>\n You can still begin investing \u2014 even with your spare change. With tools like Acorns<\/a>, a popular app that links to your credit and debit cards, and rounds up the cost of each of your purchases to the nearest dollar. Acorns invests the difference \u2014 your spare change \u2014 into a diversified portfolio, so you can build wealth almost without thinking about it.<\/p>\n Signing up for Acorns takes just minutes, and you can invest in an S&P 500 ETF, Buffett\u2019s favourite, with as little as $5. Even better if you sign up today with a recurring monthly deposit, Acorns will add a $20 bonus<\/a> to help you begin your investment journey.<\/p>\n 3. Search for small companies <\/p>\n Buffett once said that if he were starting again today with $10,000, he would focus first on small businesses. \u201cI probably would be focusing on smaller companies because I would be working with smaller sums, and there\u2019s more chance that something is overlooked in that arena,\u201d he said at the shareholder meeting (1).<\/p>\n In his early days, the billionaire investor focused on extremely small companies that would be considered small-caps. He bought a tiny furniture company in Nebraska in 1983 when it was still expanding across state lines (5). He also acquired See\u2019s Candies when it made just $4 million in annual profits in 1972 (6).<\/p>\n These small businesses were overlooked and had more room to grow. That means Buffett had a chance to buy them cheap and watch them expand.<\/p>\n Get expert stock advice <\/p>\n Need more in-depth guidance on which small-cap stocks to bet on?<\/p>\n The team of former hedge fund analysts and experts at Moby<\/a> spend hundreds of hours each week sifting through financial news and data to provide top-tier stock and crypto reports to keep you up-to-date on what\u2019s moving the markets.<\/p>\n Moby\u2019s superior research can help you reduce the guesswork when selecting stocks and ETFs.<\/p>\n In four years, across almost 400 stock picks, Moby’s recommendations have beaten the S&P 500 by almost 12%, on average.<\/p>\n With their easy-to-understand reports, you can become a wiser investor in just five minutes<\/a>, and maybe even make some investments that even Buffett would approve of. This can also be the first step to building your own circle of competency.<\/p>\n Plus: Charlie Munger\u2019s take <\/p>\n While Buffett is usually the one who gets the spotlight, his former business partner, Charlie Munger, was also a source of sage financial advice. In the same 1999 shareholders\u2019 call, Munger weighed in with his perspective on investing:<\/p>\n \u201cThe hard part of the process for most people is the first $100,000. If you have a standing start at zero, getting together $100,000 is a long struggle for most people. And I would argue that the people who get there relatively quickly are helped if they\u2019re passionate about being rational, very eager and opportunistic, and steadily underspend their income grossly. I think those three factors are very helpful (1).\u201d<\/p>\n Underspending your income and using your extra cash to save and invest is critical to building a serious nest egg.<\/p>\n Know where your money goes <\/p>\n However, it can be difficult to track where your money goes if you\u2019re not a serious budgeter. For those looking to get a handle on their income and spending, apps like Rocket Money can help.<\/p>\n Rocket Money\u2019s intuitive app<\/a> offers a variety of free and premium tools, including subscription tracking, bill reminders and budgeting basics, while premium features \u2014 like automated savings, net worth tracking, customizable dashboards, and more \u2014 make it easier to stay on top of your retirement contributions and overall financial goals.<\/p>\n Rocket Money<\/a> can also easily flag recurring subscriptions, upcoming bills and unusual charges by pulling in transactions from all your linked accounts.<\/p>\n This can help you cut unnecessary costs, and then you can manually redirect savings straight into your investment fund. No spreadsheets, no guesswork, no stress. Small habits like this can make a big difference over time.<\/p>\n Another habit to consider is reviewing your spending annually to see where you can cut down. Many of us don\u2019t consider that we could save money on yearly expenses like insurance.<\/p>\n According to the American Automobile Association (AAA), the total cost of owning and operating a new vehicle in 2025 climbed to around $12,297 per year \u2014 or $1,024.71 per month (7).<\/p>\n By using a comparison platform like Insurify, you can instantly view quotes from top-rated providers<\/a> to ensure you aren’t paying a hidden \u2018loyalty tax\u2019 to your current insurer.<\/p>\n Just answer a few basic questions<\/a>, and Insurify will show you the most affordable deals in as little as 3 minutes.<\/p>\n Not only is the process 100% free, but you could also save up to 15% by bundling your car and home insurance.<\/p>\n You May Also Like <\/p>\n Join 250,000+ readers and get Moneywise\u2019s best stories and exclusive interviews first \u2014 clear insights curated and delivered weekly. Subscribe now.<\/a><\/p>\n Article sources <\/p>\n We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines<\/a>.<\/p>\n CNBC (1<\/a>), (3<\/a>); Business Insider (2<\/a>), (5<\/a>), (6<\/a>); Bloomberg (4<\/a>); AAA Newsroom (7<\/a>)<\/p>\n This article provides information only and should not be construed as advice. It is provided without warranty of any kind.<\/p>\n","protected":false},"excerpt":{"rendered":"Moneywise and Yahoo Finance LLC may earn commission or revenue through links in the content below. 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