At the age of 94, Warren Buffett recently announced his retirement as CEO of Berkshire Hathaway, the massive holding company he has controlled since 1965.1
Buffett is a venerated investor due to his financial success and long track record of stock market outperformance. The value of Berkshire Hathaway shares grew by 19.9% per year (annualized) over the six decades from 1965 to 2024, compared with a total return of 10.4% per year for the S&P 500 Index over the same period.2
Buffett’s investment strategy evolved into a blend of quality and value — which means he identifies well-run companies with solid balance sheets that are priced fairly based on their intrinsic value (the earnings and cash flow that the underlying business produces for shareholders).3 Having bought his first stock at age 11, he became known for diligent research and diving deep into the financial statements of his businesses and acquisition targets.4
Nicknamed the “Oracle of Omaha,” Buffett has frequently shared his thoughts on finance and investing in media interviews, at Berkshire’s annual meetings (often called the “Woodstock of Capitalism”), and in his widely read letters to shareholders. As a result, his admirers have access to a treasure trove of investment fundamentals and words of wisdom that might help improve their own financial lives.
Here are seven important financial lessons to be gleaned from a selection of Warren Buffett’s notable quotes.5
1. Keep your lifestyle in check, so you can put money to work
“Do not save what is left after spending; instead spend what is left after saving.”
Despite his billionaire status, Buffett lives in the same modest house in Omaha that he has owned since 1958.6 Automatically diverting a set portion of every paycheck to a savings account, workplace retirement plan, or an IRA is a convenient way to save money you might otherwise be tempted to spend on a more expensive home or car. These savings could then be invested to help reach future goals.
2. Play the long game
“Buy into a company because you want to own it, not because you want the stock to go up.”
In Buffett’s view, investors should have an ownership mindset rather than thinking like a speculator. Speculators take large risks by trying to anticipate future price movements in hopes of making quick gains. The problem with this approach is that few people have the expertise, time, and resources to do this successfully. It’s more likely that by trying to time the market, they will sell at the bottom and buy at the top. They might miss some of the best trading days, and their portfolios will likely underperform.
Long-term investors take risks, too, but generally they buy quality assets and strive to build a balanced portfolio that is appropriate for their goals, time frame, and risk tolerance.
3. Evaluate your exposure to risk
“Only when the tide goes out do you discover who’s been swimming naked.”
Market risk refers to the possibility that an investment will lose value because of a broad decline in the financial markets caused by unexpected economic or sociopolitical developments. It would be prudent for the risk profile of your portfolio to align with your risk tolerance, or your ability to endure periods of market volatility, both financially and emotionally. This typically depends on your current financial position as well as your age, future earning potential, and time horizon — the length of time before you expect to tap your investment assets for specific financial goals.
4. Be brave when the market is scary
“Be fearful when others are greedy and greedy when others are fearful.”
The silver lining of a steep market downturn is the opportunity to buy quality stocks that you may have longed to own at much lower prices, just as Buffett did in the depths of the 2008 financial crisis.7
5. Hold on to humility
“In the business world, the rearview mirror is always clearer than the windshield.”
Buffett is willing to acknowledge his blind spots and admit his past missteps. In his latest letter to shareholders, he pointed out that he used the words “mistake” or “error” 16 times in his communications during the 2019 to 2023 period.8
Some investors (professionals and amateurs alike) overestimate their skills, knowledge, and ability to predict probable outcomes. But there’s danger in overconfidence; it may cause you to trade excessively and/or downplay potential risks.
6. Take care of the people who matter to you
“Basically, when you get to my age, you’ll really measure your success in life by how many of the people you want to have love you actually do love you.”
A thoughtful estate plan is more than a set of documents to pass down wealth and help reduce potential estate taxes after you die. It can be crafted to reflect your values, leave a positive legacy through philanthropy, and help protect your loved ones in your absence. Plus, by clearly stating your intentions in a will or trust, you can help family members prevent disputes during a painful and stressful time.
7. Don’t go it alone
“To invest successfully over a lifetime does not require a stratospheric IQ, unusual business insights, or inside information. What’s needed is a sound intellectual framework for making decisions and the ability to keep emotions from corroding that framework. You must supply the emotional discipline.”
Even the most experienced investors might benefit from an outside perspective. A trusted financial professional can help you develop an investment strategy that’s tailored to your specific situation, while providing ongoing support that may help keep you from making costly, emotion-driven mistakes.
Although there is no assurance that working with a financial professional will improve investment results, a financial professional can provide education, identify strategies, and help you consider options that could have a substantial effect on your long-term financial prospects.
The return and principal value of stocks fluctuate with changes in market conditions. Shares, when sold, may be worth more or less than their original cost. The S&P 500 is an unmanaged group of securities that is considered representative of the U.S. stock market in general. The performance of an unmanaged index is not indicative of the performance of any specific investment. Individuals cannot invest directly in an index. Past performance does not guarantee future results. Actual results will vary.
This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. CDs are FDIC Insured to specific limits and offer a fixed rate of return if held to maturity, whereas investing in securities is subject to market risk including loss of principal. This material was prepared by LPL Financial.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly.
The information provided is not intended to be a substitute for specific individualized tax planning or legal advice. We suggest that you consult with a qualified tax or legal advisor.
LPL Financial Representatives offer access to Trust Services through The Private Trust Company N.A., an affiliate of LPL Financial.
Gregory Armstrong and Joe Breslin are Registered Representatives with and Securities are offered through LPL Financial, member FINRA/SIPC Investment advice offered through ADE, LLC, a registered investment advisor. Armstrong Dixon and ADE, LLC are separate entities from LPL Financial.
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