11 Warren Buffett Investment Rules That Anyone Can Follow

Warren Buffett has made a name for himself as one of the present day's most savvy investors and thoughtful philanthropists. Even though his billions may boggle the mind, the principles behind his investing are surprisingly simple to understand and can help anyone increase their financial worth, starting now.

He encourages patience, a long-term viewpoint, and a thorough understanding of what you're investing in. By following his example, even new investors can begin to invest and build wealth over time.

Below, you'll find some of Buffett's key investing rules that you can follow to achieve financial success.

This is perhaps the underlying principle of all of Warren Buffett's investment rules. Patience helps you make money over time and avoid investment losses, even when others lack the ability and foresight to do so.

You'll also need discipline to follow one of his top pieces of advice: spend what's left after saving instead of saving what's left after spending.

Trying to buy and sell based on market predictions strategically goes against several of the investor's key rules.

It also shows a lack of patience, and one of Buffett's famous quotes says that "the stock market is a device for transferring money from the impatient to the patient."

Choose investments that will pay off over time and let them ride instead.

You can use current market trends to your advantage. Buying when others are fearful can help you get stocks at stellar prices.

Plus, selling when others are greedy can get you high prices for your stocks. This is precisely what Berkshire Hathaway did last year when it unloaded $133.2 billion in Apple shares.

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Buffett looks at a company's equity growth over the last five to 10 years when deciding whether to invest, which is why Costco is part of his company's portfolio. A company with consistent, modest growth can yield higher returns over time than a business that experiences extreme highs and lows.

A proven track record of consistent growth often indicates something that Buffett likes to see: a manageable debt-to-equity ratio. We know that Buffett's three most important words in investing are "margin of safety."

To invest like Warren Buffett, you should avoid complex investment strategies. This means staying away from derivatives, which he has described as time bombs, or businesses with unclear revenue streams.

To follow this advice, invest in companies that have basic operations and transparency with their shareholders. Look no further than Enron's 2001 scandal, which involved the careless use of derivatives that had been hidden by shady accounting.

Warren Buffett wouldn't count on stock price movements for success. Many stocks experience wild price jumps when companies make big splashes, but they level out afterward. Instead, pay attention to a company's intrinsic value because "price is what you pay, value is what you get."

Some of Berkshire Hathaway's investments with intrinsic value include insurance companies like GEICO. This helped Berkshire Hathaway perform better than Buffett expected in 2024, when more than half of the holding company's operating businesses declined.

Buffett is a longtime fan of reinvesting dividends in the same stocks that produced them. After all, if you're following Warren Buffett's rules, you'll choose investments that should continue to make you money over time.

It only makes sense to keep your money in those stocks and let compound interest do the work for you.

The investor is known for calling long-term advantages a company's "economic moats." Like physical moats that protect a castle from invaders, economic moats can protect a business from its competitors, bolstering your investment.

Such advantages can include brand loyalty and assets like trademarks or patents. Coca-Cola, Apple, and Nike are among the companies lauded for their economic moats, with NVIDIA joining the list more recently.

Buffett has notoriously shied away from technology investments, including cryptocurrency and social media, because they fall under the larger umbrella of companies he doesn't understand.

Only investing in what you understand can help you avoid short-term trends, especially when it comes to startups that aim to disrupt the market but may fail to achieve long-term stability.

Don't focus solely on technology investments, though. Firms in any industry can be hard for investors to understand.

The Berkshire Hathaway CEO isn't a fan of short-term investments. Instead, he thinks sound investments are those that you hold forever. Buffett is even known for saying, "If you aren't willing to hold a stock for 10 years, don't even think about owning it for 10 minutes."

Holding onto stocks lets you ride out dips in prices and makes you more money over time through interest. However, it only works if you pick exceptional companies that will continue to do well over time.

If you were buying the entire business, you'd want to ensure it was run well and sustainably. Warren Buffett knows those same factors make an investment good.

Yet, investors sometimes overlook how a business operates, instead focusing on popularity or recent price changes, which goes against Buffett's investing philosophy.

Warren Buffett made his first investment in 1942 and has successfully followed his rules ever since to increase his wealth and that of others. The next time a flashy stock tempts you, ask yourself if he would invest based on his rules.

If you don't feel confident or fully understand what you're investing in, it may be time to pause to avoid making money mistakes. If Buffett were to pass, you may want to, too.