Lots of people reach a point in life without the sort of financial security they would like. Having a small amount of money in the bank account might not seem like a promising place from which to build long-term wealth. But by learning from the likes of billionaire investor Warren Buffett, I think it is possible to try and do that.
Making a start
The first thing to do is to get going!
Warren Buffett did not wait until he was in his mid-thirties to begin buying shares. He did that while he was still a schoolboy.
He started buying just three shares in a company. Different share-dealing accounts have their own fee structures. Buying just a small amount of shares with one may be more economical than in another.
I would aim to start building wealth by buying shares and continuing to invest, even if it was only on a small scale to start with. Whenever I had cash to spare, I would consider putting it to work in the stock market.
Buying to hold
How has Warren Buffett made his wealth?
In his time, especially earlier in his career, he did a bit of trading. But buying and selling shares in a short timeframe in the hope of sudden gain is speculating, not investing.
Mostly, Warren Buffett is a long-term investor. That means he buys into companies he thinks have a business model that can keep churning out profits for decades, like Coca-Cola and American Express. He then does… nothing!
Well, not quite nothing. Buffett does monitor his investments to see whether anything has changed his view on a business. But if he continues to believe a company has strong prospects, he sometimes holds the shares for decades on end.
Often that can involve him collecting sizeable dividends. He finished buying a stake in Coca-Cola almost three decades ago. Back then, it cost $1.3bn. It is now worth far more and last year generated $704m in dividends to boot.
Focusing on value
Simply buying into great companies is not enough to build wealth, however.
It is necessary to buy at the right price. As Buffett says, “it’s far better to buy a wonderful company at a fair price, than a fair company at a wonderful price”.
So, Buffett does not just look to buy on the cheap (although of course he would if he could). The key point is that he seeks to avoid overpaying. He is not buying just because of price alone. Instead, he tries to find value in the stock market by buying excellent businesses at an attractive price.
The shares for sale to Warren Buffett today on the stock exchange in New York or London are the same ones available to me and other investors.
By learning from Buffett, I hope to spot some great firms with attractive valuations that can help me build wealth over the long term.
The post Few savings at 35? I’d use the Warren Buffett model to build wealth appeared first on The Motley Fool UK.
Don’t miss this top growth pick for the ‘cost of living crisis’
While the media raves about Google and Amazon, this lesser-known stock has quietly grown 880% – with a:
Greater than 20X increase in margins
Nearly 60% compounded revenue growth over 5 years – more than Apple, Amazon and Google!
A 3,000% earnings explosion
Of course, past performance is no guarantee of future results. However, we think it’s stronger now than ever before. Amazingly, you may never have heard of this company.
Yet there’s a 1-in-3 chance you’ve used one of its 250 brands. Many are household names with millions of monthly website visitors, and that often help consumers compare items, shop around and save.
Now, as the ‘cost of living crisis’ bites, we believe its influence could soar. And that might bring imminent new gains to investors who’re in position today. So please, don’t leave without your FREE report, ‘One Top Growth Stock from The Motley Fool’.
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More reading
With high interest rates, why bother with a Stocks and Shares ISA?
A once-in-a-decade opportunity to create passive income from an empty portfolio!
2 growth stocks I wouldn’t touch with a 10-foot pole
3 top travel stocks to consider as flight numbers soar
The top 2 UK shares to buy when aiming for financial freedom
American Express is an advertising partner of The Ascent, a Motley Fool company. C Ruane has no position in any of the shares 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.
Lots of people reach a point in life without the sort of financial security they would like. Having a small amount of money in the bank account might not seem like a promising place from which to build long-term wealth. But by learning from the likes of billionaire investor Warren Buffett, I think it is possible to try and do that.
Making a start
The first thing to do is to get going!
Warren Buffett did not wait until he was in his mid-thirties to begin buying shares. He did that while he was still a schoolboy.
He started buying just three shares in a company. Different share-dealing accounts have their own fee structures. Buying just a small amount of shares with one may be more economical than in another.
I would aim to start building wealth by buying shares and continuing to invest, even if it was only on a small scale to start with. Whenever I had cash to spare, I would consider putting it to work in the stock market.
Buying to hold
How has Warren Buffett made his wealth?
In his time, especially earlier in his career, he did a bit of trading. But buying and selling shares in a short timeframe in the hope of sudden gain is speculating, not investing.
Mostly, Warren Buffett is a long-term investor. That means he buys into companies he thinks have a business model that can keep churning out profits for decades, like Coca-Cola and American Express. He then does… nothing!
Well, not quite nothing. Buffett does monitor his investments to see whether anything has changed his view on a business. But if he continues to believe a company has strong prospects, he sometimes holds the shares for decades on end.
Often that can involve him collecting sizeable dividends. He finished buying a stake in Coca-Cola almost three decades ago. Back then, it cost $1.3bn. It is now worth far more and last year generated $704m in dividends to boot.
Focusing on value
Simply buying into great companies is not enough to build wealth, however.
It is necessary to buy at the right price. As Buffett says, “it’s far better to buy a wonderful company at a fair price, than a fair company at a wonderful price”.
So, Buffett does not just look to buy on the cheap (although of course he would if he could). The key point is that he seeks to avoid overpaying. He is not buying just because of price alone. Instead, he tries to find value in the stock market by buying excellent businesses at an attractive price.
The shares for sale to Warren Buffett today on the stock exchange in New York or London are the same ones available to me and other investors.
By learning from Buffett, I hope to spot some great firms with attractive valuations that can help me build wealth over the long term.
The post Few savings at 35? I’d use the Warren Buffett model to build wealth appeared first on The Motley Fool UK.
Don’t miss this top growth pick for the ‘cost of living crisis’
While the media raves about Google and Amazon, this lesser-known stock has quietly grown 880% – with a:
Greater than 20X increase in margins
Nearly 60% compounded revenue growth over 5 years – more than Apple, Amazon and Google!
A 3,000% earnings explosion
Of course, past performance is no guarantee of future results. However, we think it’s stronger now than ever before. Amazingly, you may never have heard of this company.
Yet there’s a 1-in-3 chance you’ve used one of its 250 brands. Many are household names with millions of monthly website visitors, and that often help consumers compare items, shop around and save.
Now, as the ‘cost of living crisis’ bites, we believe its influence could soar. And that might bring imminent new gains to investors who’re in position today. So please, don’t leave without your FREE report, ‘One Top Growth Stock from The Motley Fool’.
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setButtonColorDefaults(“#43A24A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#FFFFFF”, ‘color’, ‘#FFFFFF’);
})()
More reading
With high interest rates, why bother with a Stocks and Shares ISA?
A once-in-a-decade opportunity to create passive income from an empty portfolio!
2 growth stocks I wouldn’t touch with a 10-foot pole
3 top travel stocks to consider as flight numbers soar
The top 2 UK shares to buy when aiming for financial freedom
American Express is an advertising partner of The Ascent, a Motley Fool company. C Ruane has no position in any of the shares 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.
