Warren Buffett Said An Unusual Amount Of People Look At Berkshire Stock As A Savings Account, Here Is What The Oracle Of Omaha Recommends Investing Novices Do

Warren Buffett, CEO of Berkshire Hathaway Inc., has long been revered as one of the most successful investors in history. He currently has a net worth of $143 billion, according to the Bloomberg Billionaire Index, making him number 10 on the list.

The investing legend, who turned 94 in August, once shared that with “Berkshire we have an unusual number of people as shareholders who just look at Berkshire they look at as their savings account.”

“They put some money in 20 or 30 or 40 years ago, we retain it and reinvest for them, but we're their savings account,” he stated, adding, “And that’s the way I look at my own stock”

See Also: Warren Buffett Warns Parents About A Common Mistake: ‘You Don’t Want Them Asking Why’ – Here’s What He Means

For beginners looking to build wealth like these seasoned Berkshire investors, here is what the Oracle of Omaha recommends they do:

Risk Lies In What You Don't Know

Buffett believes risk stems from ignorance. He advises beginners to invest only in opportunities they fully understand.

For years, Buffett avoided technology stocks because he didn't know how to value them. It wasn't until 2016 that he invested in Apple. "Never invest in a business you cannot understand," he said once.

When It Rains Gold, Be Ready With Washtubs

Buffett's approach to saving is both frugal and strategic. Known for spending less than $3.17 on breakfast, he is known for saving cash during economic booms to invest aggressively during downturns.

Critics questioned his hoarding of cash during the early 2000s and 2008, but he used those reserves to buy undervalued companies during economic slumps.

“Every decade or so, dark clouds will fill the economic skies and they will briefly rain gold. When a downpour of that sort occurs, it is imperative that we rush outdoors carrying washtubs and not teaspoons,” he once said.

Choose Excellence Over Bargains

Buffett learned early in his career that a low price tag doesn't always mean a good deal. He has previously recommended buying high-quality businesses, even at a fair price, over mediocre ones at a discount.

"It is far better to buy a wonderful company at a fair price than a fair company at a wonderful price," he advises.

Don't Gamble With Borrowed Money

The Oracle of Omaha is firmly against using borrowed money to buy stocks, as market volatility can wreak havoc on leveraged portfolios.

Even Berkshire Hathaway, a reliable stock, has suffered significant downturns once every decade. He warns that debt can cloud judgment during market swings, leading to poor decisions.

"It is insane to risk what you have and need in order to obtain what you don't need," Buffett says.

Think Decades, Not Days

Buffett has often underscored the immense power of compounding and the importance of patience in investing. He applies this mindset to the businesses he invests in, evaluating their potential over 20 to 30 years rather than short-term horizons.

He famously once stated, "Time is the friend of the wonderful company, the enemy of the mediocre."

Image via Flickr

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.