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No savings at 40? I’d use the Warren Buffett approach to try and get rich!

No savings at 40?  I’d use the Warren Buffett approach to try and get rich!

Warren Buffett at a Berkshire Hathaway AGM

Image source: The Motley Fool

Having no savings can seem like a real problem. When one reaches a certain age a lack of cash can raise fears of financial insecurity in later years. So what should one do at age 40 with nothing in the bank? Well I certainly wouldn’t panic. I’d instead take action and learn how to make money like legendary investors such as Warren Buffett.

Here are three strategies Buffett himself has used to build long-term wealth.

Invest for the long term

The Berkshire Hathaway chairman has never been interested in making a quick buck. He believes in investing in companies with a view to holding them for many years. He’s even held some of his stocks for decades (like Coca-Colawhose shares he’s owned since the late 1980s).

Warren Buffett first started investing when he was at school. Yet he built 99% of his wealth after the age of 50. His plan was always to play the long game and it’s paid off spectacularly!

Even at the age of 40, one has around 25 to 30 years to make great money through share investing. Taking one’s time can be a real asset in the financial markets. It can eliminate the impact of short-term market volatility on someone’s wealth.

Don’t take risks

Buffett’s patient approach also involves not taking unnecessary risks. Starting an investing journey at 40 isn’t as good as starting it during one’s 20s or 30s. The sooner someone starts investing in financial markets, the more time they have to create life-changing wealth. But loading up on potentially lucrative, high-risk shares to make up for lost time can be a recipe for disaster.

Warren Buffett’s first rule of investing is not to lose money. His second rule is to never forget the first rule. A few poorly made stock buying decisions can end up undoing all the other good work an investor has done and result in big losses.

Buy quality

Buffett’s investment method is perhaps best known for its focus on value investing. Buying a stock for less than it seems to be intrinsically worth can help supercharge long-term returns. It can provide significantly more upside if profits rise strongly and the share price increases.

But the Berkshire Hathaway veteran won’t compromise on quality in the quest for good value. In fact he’s previously said that he’d rather pay a fair price for a high-quality company than a cheap price for a struggling one.

This strategy has seen Buffett acquire reliable blue chip stocks like Apple, IBM, Diageoand Kraft Heinz down the years. These companies are household names that make vast fortunes from customers across the globe.

Down the years Warren Buffett has built a personal fortune in excess of $100bn thanks to these few investing tactics. While it’s unlikely that I’ll become a billionaire, too, I think these tactics can make everyday investors like me a large pile of cash. Even those who are starting their investing journey in their 40s.

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