Buy a Business, Not a Stock
By looking at a company’s business rather than the past performance of the stock, Buffett chooses his investments with an eye to the future, not the past. Every investor knows that past performance is not indicative of future results — even if they don’t act on this knowledge! By selecting companies based on their business prospects, Buffett has achieved returns that most investors only dream about.
The Circle of Competence
Buffett’s strategy includes only investing in companies he thoroughly understands, and that are within what he refers to as his “circle of competence.”
The primary principle behind this is to know what you know, and, more importantly, know what you don’t know. As an example, Buffett famously resisted buying technology stocks for many years, insisting that he didn’t understand what companies like Apple and Microsoft did. While Buffett admits that he sometimes steps outside of this imaginary circle, he maintains that it is still a good strategy.
Financial Health
Buffett not only has strategies for investing well, but he also has strategies for overall financial health, and they boil down to a few simple tenets. The first is to live below your means.
“Do not save what is left after spending, but spend what is left after saving,” he is often quoted as saying. He also recommends avoiding debt and investing in yourself in terms of your education, talent and skills.
Buy Businesses That Have an Economic Moat
One of the things that makes businesses attractive to Buffett is an “economic moat” — a competitive advantage that makes it difficult for other businesses to take market share. More than just a first-to-market advantage, a competitive moat can include things like cost and efficiency advantages and intangible assets like intellectual property.
Apply a Margin of Safety
Buffett recommends calculating a company’s future prospects conservatively and then applying a margin of safety. In its simplest form, Buffett says that you want to buy a company for a third off of working capital. The margin of safety, in this case, one-third of working capital, is what makes the investment worthwhile even if your predictions for future results are off.
Emotional Discipline
Perhaps Buffett’s most well-known advice is to “be fearful when others are greedy, and greedy when others are fearful.” This quote summarizes the emotional discipline he applies to investing.
Letting emotion guide your investment decisions can quickly lead to trouble as you tend to hold on to bad investments for too long, which prohibits you from making good investments. Applying emotional discipline allows your decisions to be guided by the numbers rather than your feelings.
Use the 90/10 Strategy
Finally, Buffett provides a strategy for the average investor who doesn’t want or feels unable to choose stocks on their own.
In his 2013 letter to Berkshire Hathaway investors, Buffett revealed that he had advised the trustee of his personal trust to invest the cash that his wife will inherit under the terms of his will in a very specific way. He states that his instructions are to invest 10% in short-term government bonds and 90% in a low-cost S&P 500 index fund. He believes this strategy will provide better returns than what most investors can attain in any other way.
While these strategies may seem tame in comparison to some opportunities that may be available to investors, they have stood the test of time. If you’re investing for the long term, as Buffett advises, these strategies can help you get there.
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This article originally appeared on GOBankingRates.com: Warren Buffett: 8 Investment Strategies To Revolutionize Your Portfolio
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“The Best Investment for Retirement: Understanding What You’re Doing.” — Warren Buffett
Maurie Backman
Quick Read
Warren Buffett advises investors to only buy assets they fully understand.
Buffett recommends S&P 500 index funds for most retirement savers because they’re simple and easy to manage.
Staying within your circle of competence minimizes risk and could lead to success.
If you’re thinking about retiring or know someone who is, there are three quick questions causing many Americans to realize they can retire earlier than expected. take 5 minutes to learn more here
Warren Buffett is known as one of the most successful investors of all time. And one of the things that makes him so great is that through the years, he’s been more than willing to dish out advice to help everyday people achieve their financial goals.
One big component of Buffett’s strategy is to spend less than what you earn and invest the difference — ideally, for as many years as possible to allow your money to grow.
But Buffett doesn’t recommend throwing money into assets randomly and seeing where that takes you. He thinks there’s one important rule to follow as you embark on your investing journey.
Only invest in assets you understand
There are numerous assets you could invest in today that have the potential to make you money. You could buy stocks, bonds, ETFs, REITs, or dabble in alternative investments, like commodities and collectibles.
But one thing Buffett insists on is only investing in assets you understand. And that’s important advice to follow.
In fact, Buffett has long recommended that everyday investors looking to build retirement wealth invest their money in an S&P 500 index fund. The logic is simple: You’re putting your money into the broad stock market, and it’s an asset you don’t necessarily have to track or think about.
That said, there’s nothing wrong with choosing stocks individually for your portfolio. And doing so could make you a lot of money.
But Buffett says it’s important to invest in companies you understand. That means:
Understanding their business models and how they make money
Understanding their strengths and weaknesses
Understanding how they manage their balance sheets
Understanding what threats exist
In addition, it’s also important to understand how each asset you choose for your portfolio fits into your investment strategy and lends to your goals.
You shouldn’t rush to buy shares of an emerging tech stock because you keep reading that it’s going to be the next big thing. Rather, you should only buy shares of that company if you understand its inner workings and also understand what benefit it adds to your portfolio.
Understanding what you’re doing is key
There’s no single retirement investment that guarantees success. But if you make a point to only invest in assets you understand, you can minimize a lot of your risk.
Buffett has long emphasized the importance of staying within one’s “circle of competence.” That means learning the ins and outs of assets you invest in, and avoiding assets that confuse you.
Crypto, for example, tends to get a lot of hype. But if you don’t understand how it works, you shouldn’t be investing in it. Period.
This isn’t to say that you can’t learn your way around new investments. And that’s something Buffett would likely encourage.
But if you want to meet you retirement goals, make sure to stick to Buffett’s basic rule of only putting your money into assets you understand completely. It’s a strategy that’s long served Buffett well, and chances are, it’ll work well for you, too.
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Motley Fool
As 2026 Gets Closer, Warren Buffett’s Warning Is Ringing Loud and Clear. Here Are 3 Things Investors Should Do.
Jennifer Saibil, The Motley Fool
December 15, 2025 5 min read
In this article:
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Key Points
It’s more important than ever to avoid overvalued stocks as valuations expand.
Having cash ready enables you to scoop up great deals when they become available.
Staying in the market allows your investments to compound over time.
10 stocks we like better than Berkshire Hathaway ›
The new year is only two weeks away, and the S&P 500 is up 17% so far in 2025. This will be the third year in a row with double-digit gains for the index, making for an 83% gain over the past three years, a fantastic result. It’s no wonder so many investors make an S&P 500 index fund a core element of their portfolios.
Warren Buffett would be the first to tell you that’s a great strategy. In fact, he has said that most investors should employ this strategy. However, Buffett and his team sold their S&P 500 exchange-traded funds (ETF) last year, and they’ve been net sellers of stocks for the past 12 quarters, an unprecedented streak.
Berkshire Hathaway’s (NYSE: BRK.A)(NYSE: BRK.B) cash pile sits at nearly $392 billion, a 200% increase over the past three years, and its highest ever.
A robot holding a warning sign.
Image source: Getty Images.
However, I don’t think investors should interpret this as a loss of confidence in the market. Buffett is a big believer in the American story and the power of the market to generate shareholder wealth over time. And although he’s sold more stocks than he’s bought recently, he’s still buying.
So how should investors interpret it? It’s not hard to see that the market is expensive today, and after three years of high growth, it’s looking more and more like there may be a stock market bubble. Buffett clearly doesn’t see many opportunities in today’s market, and that could be a setup for some kind of correction.
Investors can’t know if that’s imminent or still years away, but you can set yourself up for success, no matter what happens in 2026. Here’s how.
- Focus on valuation and avoid expensive stocks.
Buffett is known as a value investor, which means that he seeks undervalued stocks that should be expected to rise to their intrinsic value. As the market becomes more expensive, it’s harder to find these kinds of stocks, which is why Berkshire Hathaway’s stock purchases have been limited over the past two years. The S&P 500 cyclically adjusted P/E (CAPE) ratio is higher than 39, the highest it’s been in 25 years.
In general, Buffett prefers high-quality companies to cheap stocks. One of his most oft-quoted quips is that “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.” This implies that Buffett doesn’t see today’s prices as fair, let alone cheap.
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Benzinga
Tony Robbins Says Warren Buffett Told Him The Portfolio He’d Choose To Protect His Family’s Wealth — He ‘Grabbed My Arm’ And Said, ‘It’s So Simple’
Fahad Saleem
Updated December 15, 2025 3 min read
Billionaire Warren Buffett told business and life coach Tony Robbins 15 years ago about his simple approach for protecting and growing his family’s wealth.
Robbins in 2010 had a rare opportunity to speak privately with Buffett just before NBC’s “Today” show. Both were invited as guests for a discussion about the economy, according to Robbins’ account in his book. “Money Master the Game.”
Robbins said Buffett’s rise from a humble stockbroker in Nebraska to one of the world’s most successful investors had always inspired him. He asked the Oracle of Omaha for an interview to discuss how individual investors could succeed in a volatile economy. Buffett politely declined.
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“He looked up at me with a twinkle in his eye,” Robbins wrote. “‘Tony,’ he said, ‘I’d love to help you, but I’m afraid I’ve already said everything a person can say on the subject.’”
Undeterred, Robbins pressed on and asked Buffett what portfolio he would suggest for his family to protect and grow their wealth now that he had pledged most of his money to charity.
“He smiled again and grabbed my arm,” Robbins said. “‘It’s so simple,’ he said. ‘Indexing is the way to go. Invest in great American businesses without paying all the fees of mutual fund managers, and hang on to those companies, and you will win over the long term!’”
In 2006, Buffett pledged to give most of his wealth to charity.
According to Robbins, billionaire hedge fund manager Ray Dalio and publisher Steve Forbes later reached out to Buffett on his behalf to arrange an interview, but he declined again. Buffett reiterated that individual investors should buy index funds to gain exposure to some of the best companies and stay invested for the long term.
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‘My Money is Where My Mouth Is’
Buffett has consistently advised investing in index funds in his letters to shareholders, interviews, and other public statements over the past several decades. In December 2017, Buffett won a bet he made in 2007 with Protégé Partners that hedge funds would not beat index funds.
In his 2013 letter to Berkshire Hathaway shareholders, Buffett revealed the instructions he gave in his will to a trustee on how to invest his family’s money.
“My money, I should add, is where my mouth is,” Buffett wrote. “My advice to the trustee could not be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund. I believe the trust’s long-term results from this policy will be superior to those attained by most investors – whether pension funds, institutions or individuals – who employ high-fee managers.”