Warren Buffett’s 4 Essential Tips Every Young Investor Needs to Know

Warren Buffett, the “Oracle of Omaha,” made his first stock purchase when he was just 11 years old. Today, his net worth is more than $140 billion.

While most young investors will never achieve these gains, Buffett’s basic advice remains very clear: start early, be patient, and only invest in what you understand. These principles have guided him for decades – and they’re exactly what he tells today’s young investors who are just starting out.

Better sooner than later

11 may be too young to start investing unless you’re an adventurous young man like Buffett, but when is the right time?

“I started with my kids when they were 16,” said Chad Gammon, a certified financial planner and owner of Custom Fit Financial. “This was the time they started making money. It was a good time to start because they wouldn’t have expenses like they would later in life, like rent or a mortgage. My kids learned that they would rather invest than take on debt.”

There’s no ideal age to start, exactly. It is a question of when conditions align to make the investment possible. “The first few paychecks are a great learning opportunity,” Gammon said.

Patience is key

It’s one thing to get that exciting new stock once you have a few extra dollars to invest, but it’s another thing to get paid once you’ve made your first dollar on that investment. Buffett recommends taking a deep breath and focusing on your long-term goals when the market inevitably starts to hiccup, either up or down. Wait at least a little while and keep an eye on the best time to do this step. You don’t want to simply react.

Buffett once said: “The stock market is designed to transfer money from the active to the patient.” Then there’s this gem: “Our favorite retention period is forever.” This doesn’t mean you will never sell, but you will be investing in a business that can provide value for a long time.

Think of a popular stock like Microsoft Corporation (MSFT). In September 2005, the stock was trading at about $18 per share. Over the next decade, it saw modest growth, rising to about $50 per share by September 2015. Patient investors who stuck with it saw the value rise to more than $500 per share in October 2025.

Be picky

Much of Buffett’s advice to investors focuses on avoiding impulsivity. Confidence is a good thing, provided it stems from doing one’s homework, rather than relying on one’s intuition or simply following the crowd.

Buffett’s longtime friend and associate, Charlie Munger, quotes Buffett as saying that he would give each investor “a ticket with just twenty digits…representing all the investments you’ll ever have to make in your lifetime.” If you know you can only invest 20 times, you will be more careful about where you put your money each time.

“I’ve taught my kids how to look for low-cost investments that cover more than one company, such as index funds,” Gammon said. These funds diversify your portfolio with a single purchase.

Do your homework

Buffett’s investment philosophy emphasizes the principle that you should know what you are buying. He is famous for reading annual reports cover to cover and studying a company’s business model before investing a single dollar. It’s not about getting an MBA or understanding every industry, it’s about staying within what he calls your “circle of competence.”

“You don’t have to be an expert in every company, or even many of them,” he wrote in a 1996 letter to Berkshire Hathaway shareholders. “You just need to be able to evaluate companies within your circle of jurisdiction. The size of this circle is not so important; but knowing its boundaries is vital.”

This means that if you work in the healthcare industry, you may have a better understanding of pharmaceutical companies. If you work in technology, app activities may make more sense to you. If you are a child, you may be more attracted to the media companies that create your favorite characters. The key is to recognize what you know and, just as importantly, what you don’t know.