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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.
At his company’s annual meetings, Berkshire Hathaway’s shareholders have the opportunity to pick Buffett’s brain on any number of topics.
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One investor who attended the conference in 1999 cut right to the chase in a memorable way. “Mr. Buffett, how can I make $30 billion dollars?” he asked (1).
As always, the Oracle of Omaha conveyed complicated theories in simple terms — rules that can guide any investor.
“If I were getting out of school today and I had $10,000 to invest … I probably would focus on smaller companies … 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.”
If you want to learn the ropes that helped the nonagenarian accumulate a massive fortune, here are three of his fundamental rules to consider.
1. Understand your circle of competency
Tom Watson Sr., the founder of IBM (NYSE:IBM), once said, “I’m no genius. I’m smart in spots — but I stay around those spots (2).” That’s the mantra Buffett has applied to his investing, too.
By focusing on industries he understands and avoiding temptation to chase trends, Buffett has built his fortune through a disciplined and patient approach.
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.
“You’ve got to be prepared, when you buy a stock, to have it go down 50% — or more — and be comfortable with it, as long as you’re comfortable with the holding,” he said (3).
Read More: Approaching retirement with no savings? Don’t panic, you’re not alone. Here are 6 easy ways you can catch up (and fast)
Construct your circle
You can build your own circle of competency with trusted advisors who bring their expertise on growing wealth — and Advisor.com can help you find a financial professional that’s right for you.
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.
You can view the advisors’ profiles, read past client reviews, and schedule an initial consultation for free with no obligation to hire. There is also an accessible family office option for established investors with larger portfolios.
2. Start young
Buffett’s best advice for investors is to get started as early as possible. He has a simple metaphor to explain his wealth-building strategy.
“We started with a little snowball on top of a very tall hill,” he said (1). “We 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.”
Indeed, the length of Buffett’s career is a key piece of his enormous wealth. He bought his first stock at the age of 11 and is still actively investing.
In fact, the majority of Buffett’s wealth was accumulated after he turned 65. In 1999, his net worth was just $30 billion. Today, it’s nearly five times greater at about $150 billion, as per Bloomberg (4).
Begin investing today
Ordinary investors can best harness the power of compounding by starting as early as possible. With platforms like Robinhood, you can invest in ETFs like the Vanguard S&P 500 to get a start on your nest egg.
Robinhood has 24/7 support, and you won’t pay any commission fees on stocks, ETFs and options. Their platform also offers both a traditional IRA and a Roth IRA, so you can benefit from tax-efficient retirement investing.
New Robinhood customers can also get a free stock once you sign up and link your bank account to the app.
You can pick your stock reward from top American companies, with amounts ranging from $5 to $200.
Squirrel away your spare change
But what if you don’t have Buffett’s hypothetical $10,000 to start with?
You can still begin investing — even with your spare change. With tools like Acorns, 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 — your spare change — into a diversified portfolio, so you can build wealth almost without thinking about it.
Signing up for Acorns takes just minutes, and you can invest in an S&P 500 ETF, Buffett’s favourite, with as little as $5. Even better if you sign up today with a recurring monthly deposit, Acorns will add a $20 bonus to help you begin your investment journey.
3. Search for small companies
Buffett once said that if he were starting again today with $10,000, he would focus first on small businesses. “I probably would be focusing on smaller companies because I would be working with smaller sums, and there’s more chance that something is overlooked in that arena,” he said at the shareholder meeting (1).
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’s Candies when it made just $4 million in annual profits in 1972 (6).
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.
Get expert stock advice
Need more in-depth guidance on which small-cap stocks to bet on?
The team of former hedge fund analysts and experts at Moby 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’s moving the markets.
Moby’s superior research can help you reduce the guesswork when selecting stocks and ETFs.
In four years, across almost 400 stock picks, Moby’s recommendations have beaten the S&P 500 by almost 12%, on average.
With their easy-to-understand reports, you can become a wiser investor in just five minutes, 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.
Plus: Charlie Munger’s take
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’ call, Munger weighed in with his perspective on investing:
“The 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’re passionate about being rational, very eager and opportunistic, and steadily underspend their income grossly. I think those three factors are very helpful (1).”
Underspending your income and using your extra cash to save and invest is critical to building a serious nest egg.
Know where your money goes
However, it can be difficult to track where your money goes if you’re not a serious budgeter. For those looking to get a handle on their income and spending, apps like Rocket Money can help.
Rocket Money’s intuitive app offers a variety of free and premium tools, including subscription tracking, bill reminders and budgeting basics, while premium features — like automated savings, net worth tracking, customizable dashboards, and more — make it easier to stay on top of your retirement contributions and overall financial goals.
Rocket Money can also easily flag recurring subscriptions, upcoming bills and unusual charges by pulling in transactions from all your linked accounts.
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.
Another habit to consider is reviewing your spending annually to see where you can cut down. Many of us don’t consider that we could save money on yearly expenses like insurance. However, with OfficialCarInsurance, you can easily compare quotes from multiple insurers, such as Progressive, Allstate and GEICO, to ensure you’re getting the best deal.
According to the American Automobile Association (AAA), the total cost of owning and operating a new vehicle in 2025 has climbed to around $12,297 per year — or $1,024.71 per month (7).
Many people overpay on their car insurance without realizing it. Rates can vary widely depending on your state, driving history and vehicle type, which is why it’s important to review your bill annually and shop around for a better price. By using OfficialCarInsurance.com, you could find rates as low as $29 per month in just two minutes.
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Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
CNBC (1), (3); Business Insider (2), (5), (6); Bloomberg (4); AAA Newsroom (7)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.