When it comes to smart investors, few have achieved the same level of stardom as Warren Buffett has. Even though he’s now in his 90’s, he’s invested wisely over countless decades, increasing his net worth along the way. Yet even when he was in his 40’s, he was still able to triple his net worth via the stock market. Here’s how I can try to emulate his example.
Multi-decade investments
Buffett’s net worth went from approximately $30m to $100m from age 40 to 50. Over the span of the decade a lot happened.
Via his company Berkshire Hathaway, he spent the years buying stock and sizeable shareholdings in several firms that yielded good results. One key point here is that some stocks he bought in the 1970’s are still owned by him today!
An example is GEICO, the insurance company. Buffett invested $4m in the business back in 1976. He kept increasing his shareholding in the firm until 1996, eventually taking over the entire company. In his 40’s, the value of the business increased. Incredibly, the business is still adding to Buffett’s profits today. In the May Q1 report, it reported $703m in earnings.
The point here is that in order for me to generate serious wealth over time, I need to have the right investing mindset. I can often miss out on big returns from stocks by cutting my winners too early and holding my losing ideas for too long. Buying and holding might seem boring, but it’s often the way to gain high profits.
Getting advice from the best
Aged 45, Buffett decided to merge his business with Charlie Munger back in 1976. Munger is another very shrewd investor and has been his right hand man ever since. The advice and help that Munger has proved to be invaluable along the way.
For example, relating to the first point, Munger is quoted as saying that “the big money is not in the buying and selling, but in the waiting.” No doubt he helped Buffett to be patient along the way.
Today, I feel that my chances of increasing my net worth via stocks will be massively helped in listening to other smart investors. The more information I can tap into, the more informed I can be. This relates to specific stock research and also with more general investment advice.
Thinking about the numbers
To triple a net worth in a decade, a lot depends on how much I have to start with! A net worth of £1,000 is easier to triple than if I’m worth £100m (fun fact: I’m not).
Another disclaimer is that I’m not advocating taking high levels of risk in order to generate insane returns in a short space of time.
Yet think about this. What if I’d copied Buffett and invested in a mix of growth and value stocks a decade ago? If my portfolio included stocks such as Apple, Tesla and Microsoft, I’d have easily matched his returns rate.
