I Asked ChatGPT for Warren Buffett’s Best Lesson for Everyday Investors

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While billionaires like Elon Musk may make the news more often with their flashy antics, it’s the understated Warren Buffett you should be focusing your attention on. Known as the “Oracle of Omaha,” Buffett is one of the most successful investors of all time who has made Berkshire Hathaway into a global powerhouse.

While Buffett has lots of advice that investors can learn from, I wondered what might be his best lesson for average investors. I decided to ask ChatGPT to distill down a simple answer, a “best of Buffett.”

Buffett’s Best Lesson

When it comes to advice for everyday investors, Buffett’s message is surprisingly simple, ChatGPT stated: Most people should invest in broad, low-cost index funds and hold them for the long haul.

It acknowledged that this is not a “flashy” lesson, nor does it involve “secret formulas, inside information or the latest hot stock.” What it is, however, is time-tested, over many decades, and with proof in the success he’s built for himself and others.

Why Index Funds Beat Stock Picking

So what makes index funds so special? Buffett has spent his career carefully analyzing businesses, but he doesn’t expect the average investor to be able to do what he does. Those who try to pick individual stocks typically fail to find big hits. ChatGPT pointed out that research supports his view. “Studies consistently show that the majority of professional fund managers fail to outperform the market over the long term,” the AI said.

An index fund, then, takes the guesswork out of investing. ChatGPT explained that these funds are designed to track the performance of a market index, such as the S&P 500, which represents the 500 largest publicly traded companies in the U.S. Thus, “instead of betting on one or two companies, you own a piece of hundreds.” That “built-in diversification” not only lowers your risk, but because index funds are passively managed, you won’t pay much in fees on top of them, as compared to actively managed funds.

The Power of Patience

This kind of investing requires something many young and hungry investors might not have in spades: patience. ChatGPT shared one of Buffett’s most famously quoted sayings, that the stock market is “a device for transferring money from the impatient to the patient.”

In other words, trying to time market — jumping in and out to capture quick gains — rarely works. “The real rewards go to investors who stay the course, weather short-term downturns, and let their money grow over decades,” it stated.

The AI offered an example: If you had invested $10,000 in an S&P 500 index fund in 1990 and left it alone, it would be worth more than $200,000 today. That growth didn’t happen in a straight line, either. The market endured recessions, crashes and recoveries. However, staying invested allowed compounding returns to do their work.

Buffett Puts His Money Where His Mouth Is

Any skeptics need only look to Buffett’s own success as proof. The AI pointed out that in 2007, he famously made a $1 million bet that an S&P 500 index fund would outperform a group of hedge funds over 10 years. “The result wasn’t even close: the index fund gained over 125% while the hedge funds lagged far behind,” it said.

Buffett has even left instructions that when he passes away, 90% of the money left to his wife should go into a low-cost S&P 500 index fund, with the remaining 10% in short-term government bonds. “If the approach is good enough for his own family, it’s hard to ignore as advice for everyone else,” ChatGPT said.

What This Means for Everyday Investors

So how can you apply Buffett’s lesson in your own financial life? Here are a few simple steps:

• Automate your investing. Set up automatic contributions into a retirement account (like a 401(k) or IRA) or brokerage account that invests in index funds.
• Keep costs low. Fees eat into your returns over time. Low-cost index funds typically charge expense ratios as low as 0.03%, saving you potentially thousands of dollars over time.
• Think long term. Short-term market swings are inevitable. Instead of reacting emotionally, remind yourself that investing is a marathon, not a sprint.
• Avoid distractions. Financial news often focuses on short-term movements or “the next big thing.” Buffett advises tuning out the noise and focusing on steady, consistent investing.

Sometimes Simple Is Best

So, there it is. Buffett’s best lesson is also his simplest: Invest in the whole market, keep your costs low and stay invested for the long run. You don’t need to be a financial wizard to build wealth. By following this straightforward approach, you can let time and compounding do the heavy lifting.

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