Warren Buffett will go down in history as one of the most influential people of the last 60 years. He is quoted as being the fifth richest man in the world. In May 2025, Warren Buffett stepped down from an active role in Berkshire Hathaway. Today we honor him for his inspiration to average people who want to invest wisely through his simple strategies.
Through his own admission Buffett will happily tell you his worst investments, while at the same time imparting some gems of wisdom. Warren lived a very simple life, remaining in the same home he purchased in Omaha in 1958. Over that time his wealth grew to an estimated value 169 billion USD.
The first lesson from Buffett is that you don’t need to have the biggest house to be happy. Choosing a more modest home that meets your physical requirements, will at the end of the day require a smaller mortgage which hopefully can be repaid quickly, leaving you with funds to start an investment program.
When it comes to investing Warren Buffett’s original preferred asset allocation was 70% in stocks and 30% in fixed interest securities. With the growth of managed funds, most investors are likely to choose this pathway. For some investors, they will want to diversify their investments with real estate. It is also important to remember that in Australia we all have a significant amount of our investments in Superannuation.
Later, Buffett recommended that a 90/10 Investment Strategy is better for the average investor. Because the average investor doesn’t have the skills, he recommended that they invest 90% of these investments in low-cost index funds. The remaining 10% in fixed-interest securities ensures liquidity. He states the advantage of this strategy is:
- An Index Fund provides good long-term growth
- Risk is limited by using a broad index. (In Australia this would be an Index Fund for the ASX200)
- Passive funds have lower fees
- Less time and stress is required to manage your investments
Famous Quotes
Much can be learned from Warren Buffett’s ability to put a complex strategy into a simple quote that will be remembered. Here I have picked out a small selection that I think will be helpful as you plan your investment strategy.
- A simple rule dictates my buying: Be fearful when others are greedy and be greedy when others are fearful.
- Price is what you pay, Value is what you get.
- The first rule is not to lose money. The second rule is not to forget the first rule.
- Risk comes from not knowing what you are doing.
- It is better to hang out with people better than you and you are more likely to drift in that direction.
- It is far better to buy a wonderful company at a fair price than a fair company at a wonderful price.
- Derivatives are financial weapons of mass destruction.
- Only when the tide goes out, you discover who is swimming naked.
- Our favorite holding is forever.
- An investor of today does not profit from yesterday’s growth.
Snowball
Alice Schroeder wrote the official biography of Warren Buffett. It is a very large book called Snowball.
Good Financial Reads has written a review of Snowball.
Glenis Phillips SF Fin – Developer of Financial Mappers and Advice Online
Disclaimer: Financial Mappers does not have an Australian Services License, does not offer financial planning advice, and does not recommend financial products.
