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Warren Buffett is one of the most successful investors in history. He’s turned a modest sum into more than $130bn over several decades. While most people aren’t aiming to become the next Oracle of Omaha, his principles can be a valuable guide for building wealth, even starting from zero.
The first step is adopting Buffett’s mindset about money. He’s famously said: “Do not save what is left after spending, but spend what is left after saving.” That means paying yourself first. Essentially this is about setting aside a portion of every pound earned before covering discretionary expenses. Even small, regular amounts can accumulate into meaningful capital over time.
The next steps
Once there’s money to invest, ideally within a Stocks and Shares ISA, Buffett tells us to focus on buying quality assets. Rather than chasing quick gains, he seeks companies with durable competitive advantages, strong management, and consistent profitability.
Another Buffett hallmark is patience. He avoids reacting to short-term market swings and instead allows investments to grow over years, or even decades. His short-lived investment in TSM is one of the few recent exceptions. This long-term compounding effect can turn modest initial sums into substantial wealth.
Importantly, Buffett also warns against unnecessary risk. He keeps a cash buffer to weather downturns and avoids speculative ventures that could jeopardise capital. For beginners, low-cost index funds or diversified investment trusts can provide a straightforward way to gain exposure to the stock market while keeping risk manageable.
Buffett also talks about something called a margin of safety. His margin of safety means buying far below intrinsic value or perceived value of a stock. This creates a protective buffer against errors or market shocks, reducing risk, and preserving capital even if valuations prove imperfect.
By combining consistent saving, disciplined investing, and long-term thinking, it’s possible to steadily build wealth. We’ll never be as rich as Buffett, but we’ll likely be better off than we were.
Investing like Buffett
What’s the easiest way to invest like him? Well, the most obvious way would involve buying shares in Berkshire Hathaway (NYSE:BRK.B).
Investing in Berkshire Hathaway offers a straightforward route to mirror Warren Buffett’s long-term investment philosophy. Through this single holding, shareholders gain exposure to a broad range of businesses and equity stakes in major firms like Apple, Coca-Cola, and American Express, all managed under his capital allocation strategy.
But it’s not an investment trust, it’s a conglomerate. The company’s diverse operations — from insurance and railroads to energy and consumer goods — provide built-in diversification, helping to cushion against sector-specific downturns.
While Berkshire doesn’t pay a dividend, retained earnings are reinvested to compound in value over time, reflecting Buffett’s preference for internal growth. However, one key risk is succession.
Buffett, now in his nineties, has outlined a transition plan and new CEO when he retires this year, but uncertainty remains about how the company will perform under new leadership. Despite that, for those seeking steady, long-term exposure to a value-driven investment ethos, Berkshire Hathaway is worth considering. It’s part of my portfolio.
