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10 Investing Secrets Warren Buffett Really Wants You to Know

Warren Buffett dishes out sage investing advice to those who want to build real wealth.

By Jacob Wade

Edited by Michael Kurko

Updated Nov. 25, 2024

Warren Buffett is worth almost $150 billion and is one of the best American investors of all time. He's shared his wisdom with investors over the years, helping new and experienced investors learn to "be like Buffett."

Here are 10 investing secrets from the "Oracle of Omaha" himself to help you build your wealth.

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Don't pick individual stocks (even though he does)

Warren Buffett has built his holding company, Berkshire Hathaway, into a $300 billion portfolio on the backs of large investments in individual companies.

But contrary to his personal investing style, Buffett doesn't recommend that retail investors pick stocks, but build a diversified portfolio of low-cost funds instead.

In an interview with CNBC, Buffett said, "the trick is not to pick the right company, the trick is to essentially buy all the big companies through the S&P 500 and to do it consistently and to do it in a very, very low-cost way."

Buffett realizes that most investors are not professionals with decades of experience evaluating stocks. That's why he recommends buying funds that hold hundreds of stocks, such as an S&P 500 index fund.

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Invest for the long term

In his 1988 letter to investors, Warren Buffett famously said "my favorite holding period is forever."

Buffett is a fan of investing for long periods to give his investments the chance to grow and compound. And when looking at investments, he advises investing in something you plan on holding for a very long time.

In fact, in his 1996 annual letter to shareholders, Buffett said, "If you aren't willing to own a stock for ten years, don't even think about owning it for ten minutes."

Investing for the long term allows you to ignore the ups and downs of the market and focus on the bigger picture. It also keeps you from trying to time the market, which typically results in lower returns over your lifetime.

Keep cash on hand

During times of market turbulence, having a stockpile of cash on hand allows you to survive a long downturn, as well as scoop up deals on investments. Buffett once mentioned that Berkshire Hathaway keeps cash on hand for this very reason:

"We believe in having cash. There've been a few times in history and there will be more times in history where if you don't have it, you don't get to play the next day."

Buffett believes in holding cash for upcoming investment opportunities, as well as to keep companies afloat.

He further emphasized this point about holding cash by saying, "It's like oxygen. It's there all the time, but if it disappears for a few minutes…it's all over."

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Don't invest in crypto

It's no secret that both Warren Buffett isn't a fan of cryptocurrency. In fact, Buffett called Bitcoin "rat poison squared."

Buffett is a fan of investing in productive assets — assets that actually produce something tangible. According to Buffett, he doesn't understand exactly what it is that Bitcoin does:

"If you ... owned all of the bitcoin in the world and you offered it to me for $25, I wouldn't take it... because what would I do with it? I'll have to sell it back to you one way or another. It isn't going to do anything."

While cryptocurrency is a dynamic new asset class, Buffett doesn't believe in its long-term potential, and even told CNBC he would "never have a position in cryptocurrency."

Invest in yourself

When inflation was at a 40-year high in 2022, Buffett shared advice for students on "Good Morning America":

"Investing in yourself is the best thing you can do. Anything that improves your own talents. And I always advise students to do that, high school students, college students and obviously investing in your children is, in some ways, investing in yourself."

Buffett continued "if you have true talent yourself, and you have maximized your talent, you have a terrific asset."

While investing in the stock market is one way to grow your wealth, investing in your own skills and growth can be lucrative as well. Whether it's taking classes to improve your skills, or learning a new skill through an apprenticeship, investing in yourself always pays off.

Keep buying

When the market is down, it can be tempting to stop investing until things start to get better. But Buffett says the opposite is true: Continuing to invest no matter what the market does is the best plan.

In an interview with CNBC, he said, "The temptation when you see bad headlines in newspapers is to say, well, maybe I should skip a year or something. Just keep buying. American business is going to do fine over time, so you know the investment universe is going to do very well."

This strategy — known as "dollar-cost-averaging" — encourages investors to invest on a regular schedule and ignore the news. Over the long term, the average purchase price of your investments will go down (as the market drops), allowing you to profit even more.

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Never lose money

Warren Buffett is famous for telling investors that his number one rule of investing is to "never lose money." This rule was popularized during an interview where Buffett stated:

"The first rule of investing is don't lose. The second rule of investing is don't forget rule number one. And that's all the rules there are."

While this may seem an impossibility (even Buffett has lost money on investments), he explains this philosophy further by saying, "If you buy things for far below what they're worth, and you buy a group of them, you basically don't lose money."

The idea is to be very careful about what you invest in. Do your research, make sure you understand the company or asset you are investing in and buy quality assets that will be worth more in the future.

Be greedy when others are afraid

Warren Buffett is a fan of greed. Not in the "make money at any cost" sense, but he loves to take advantage of low-cost investments when there is fear in the market.

In his 1986 letter to shareholders, he said, "Our goal is more modest: We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful."

Buffett is known for buying large portions of companies when prices are depressed, and earning massive returns as the market rebounds. So when there is fear in the market, it is an opportunity for savvy investors to get the deal of a lifetime.

Start investing early

Warren Buffett was asked in 1999 how to make $30 billion (his net worth at the time).

His answer? "Start young…we started building this little snowball at the top of a very long hill…The trick is to have a very long hill, which means starting very young or living to be very old."

Buffett equated building wealth with rolling a snowball down a hill. You may start with a small amount, but through the power of compound interest, your money will grow, just like a snowball picking up snow on the way down.

And the earlier you start, the longer your runway is to build your snowball into a massive amount of wealth that will help you get ahead financially.

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Choose financial advice carefully

Financial advice may not be worth what you pay for it, according to Warren Buffett. In a 2022 annual shareholders meeting, he slammed the professional financial advisor community:

"It's amazing how hard people make a simple game…but if they told everybody what a simple game it was, 90% of the income of the people speaking would disappear." Buffett further pushed the point by saying, "if you…have monkeys throwing darts at the page [to pick investments] and take away the management fees…I'll be on the monkeys."

His point is this: Financial Advisors that have an incentive to put you in certain investments line their own pockets but might not help you build wealth. And while many "fee-only" or "fee-for-service" advisors truly help investors build an investment portfolio that's best for the client, there are many who don't.

Always understand how your advisor is paid to make sure you are getting fair advice and not overpaying for the service.

Bottom line

Warren Buffett is widely considered the best investor of our generation and has amassed a personal net worth of almost $150 billion.

Indeed, the "Oracle of Omaha" offers sage advice to investors of all ages, and he continues to tout the advantages of passive investing, index funds, and long-time horizons.

Putting a few of these tips into practice can help you build wealth and start investing while not stressing out about the ups and downs of the market.

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