Warren Buffett is a household name thanks to his prowess in investing. He is in the top five list of the wealthiest people in the world. The Oracle of Omaha as he is popularly known has made a wealth of $80 billion through investments. He is now 87 years and continues to generate more wealth through excellent decision making in choosing the companies to invest in. He started trading the stock markets when he was 11 years old. Most of his wealth has been created by investing in the right companies. He has his stringent list of dos and don’ts when it comes to investment. With his experience of over 75 years in the industry, he has learned so much.
Warren Buffett shares his investing tip with his followers. Warren Buffett advice average investors to put their money in low-cost S&P 500 index funds and government bonds. He revealed this tip in his 2013 annual letter to shareholders of Berkshire Hathaway Inc., the company he leads. He is the chairman and CEO of the company.
Warren Buffett has been a proponent of index funds since he believes they create more profits over the long term than other investment models. It is better to use the index funds than to high hedge fund managers who will charge huge fees and deliver dismal results.
Another lesson taught by Warren Buffett is for investors to look for investment opportunities in “Moats.” These are companies that have a free flow of capital, have high competitive advantages and have strong management history. Warren Buffett does not invest in new companies which have not stood the test of time.
Warren Buffett has invested heavily in companies such as Apple, Wells Fargo, Coca-Cola, Bank of America among other companies which meet the minimum requirements highlighted above. He believes as long as one is buying a stock at the right time and price, rewards are guaranteed.