Warren Buffett: 3 Investing Tips You Can’t Afford To Ignore in 2025
Written by
Heather Altamirano
Edited by
Gary Dudak
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Warren Buffett is one of the world’s richest people, with a reported net worth of around $141 billion, and he earned every dime with smart investments and by living frugally.
Born during the Great Depression, Buffett had the insight to start investing in stocks at a young age. His savviness continued, and in his 30s he became a millionaire when he bought a controlling stake in Berkshire Hathaway. At the time in 1965, the company was a troubled textile company. Buffett turned it into a financial powerhouse, and he’s been at the helm ever since.
Buffett, who is praised for his generous philanthropic efforts, financial prowess and long-term investing approach, swears by a simple strategy that has made him who he is today. Here’s a look at three of his key investing tips that you don’t want to ignore.
Stocks: Invest in What You Understand
Whether you believe in taking chances or are more conservative when it comes to stocks, there is an opportunity for every type of investor. Given Buffett’s success with stocks, it’s no surprise he sticks to his winning approach. He has a diverse portfolio that includes companies like Apple, Bank of America and Coca-Cola — but he avoids companies that aren’t in his wheelhouse.
“Never invest in a business you cannot understand,” he is famously quoted as saying.
That doesn’t mean you have to steer completely clear of a specific area like healthcare or tech if you’re not knowledgeable about it. But it does mean approaching cautiously and educating yourself in that sector before buying stock.
Real Estate Investment Trusts Are a Great Source of Passive Income
Real estate is generally a safe bet for investing because it’s viewed as lower risk. The return isn’t always as high compared to other investments, but rental properties can provide a steady stream of income and are attractive to investors seeking secure investments for the long term.
However, not every investor wants to take on collecting rent and managing properties. Many prefer to invest in real estate investment trusts (REITs), a firm that owns and operates real estate, such as the case with Buffett. Until recently, he reportedly owned a 9.8% stake in Store Capital for a substantial amount of passive income.
Exchange-Traded Funds Are Best for Most Investors
Exchange-traded funds (ETFs) are a collection of securities packaged and sold in a single basket, or fund. They can expose you to a variety of securities that allow you to diversify with the purchase of a single share.
ETFs also easily allow investors to diversify at a low cost, something Buffett sees the importance of. He has two ETFs in his portfolio — SPDR S&P 500 ETF Trust (SPY) and Vanguard S&P 500 ETF (VOO). While ETFs aren’t the majority of his investments, Buffett said at Berkshire’s 2020 annual meeting, “In my view, for most people, the best thing to do is own the S&P 500 index fund.”
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