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 stands at over $140 billion.

While most young investors won’t match those gains, Buffett’s core advice remains very straightforward: start early, stay patient, and only invest in what you understand. These principles have guided him for many decades—and they’re exactly what he tells young investors today who are just getting started.

Sooner Is Better Than Later

Age 11 might be too young to begin investing unless you’re an enterprising youth like Buffett, but when’s the right time?

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

There isn’t a perfect age to start, exactly. It’s a matter of when circumstances align to make investing doable. “The first few paychecks are a great learning opportunity,” Gammon said.

Patience Is Key

It’s one thing to grab that exciting new stock as soon as you have a few extra dollars to invest, but it’s something else to cash in as soon as you earn your first dollar on that investment. Buffett recommends taking a deep breath and focusing on your long-term goals when the market inevitably begins hiccupping, either upward or downward. Wait at least a bit and keep an eye out for the best time to make that move. You don’t want to simply react.

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

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

Be Picky

Much of Buffett’s advice for investors focuses on avoiding being impulsive. Confidence is good, provided that it stems from doing one’s homework, rather than relying on gut instincts or simply following the crowd.

Charlie Munger, Buffett’s longtime friend and partner, quotes Buffett as saying that he would give each investor “a ticket with only 20 slots … representing all the investments that you got to make in a lifetime.” If you knew you could only invest 20 times, you’d be more cautious about where you placed your money each time.

“I 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 one purchase.

Do Your Homework

Buffett’s investment philosophy emphasizes the principle that you must know what you’re buying. He’s famous for reading annual reports cover to cover and studying a company’s business model before investing a single dollar. This isn’t about having 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 on every company, or even many,” he wrote in a 1996 letter to Berkshire Hathaway shareholders. “You only have to be able to evaluate companies within your circle of competence. The size of that circle is not very important; knowing its boundaries, however, is vital.”

This means that if you work in health care, you may have a better understanding of pharmaceutical companies. If you’re in tech, app businesses might make more sense to you. And if you’re a kid, you might be more drawn to the media companies that make your favorite characters. The key is recognizing what you know—and just as importantly, what you don’t.