Buffett Reveals Ideal Investments if Starting Over at 30

Ask: If you were starting out again today in your early 30s, what would you do differently or the same in today’s environment to replicate your success? In short, Mr. Buffett, how can I make $30 billion?

Warren Buffett: If I were getting out of school today and I had $10,000 to invest, I’d start with A. I would start going right through companies, and I probably would focus on smaller companies because I would be working with smaller sums and there’s more chance that something is overlooked in that arena.

As Charlie has said earlier, it won’t be like doing that in 1951 when you could leaf through and find all kinds of things that just leapt off the page at you. But that’s the only way to do it. **_You have to buy businesses or little pieces of businesses called stocks, and you have to buy them at attractive prices, and you have to buy into good businesses. That advice will be the same 100 years from now in terms of investing. _**That’s what it’s all about. And you can’t expect anybody else to do it for you.

People will not tell you about wonderful little investments. It’s not the way the investment business is set up. You’ve got to learn what you know and what you don’t know. And within the arena of what you know, you have to pursue it very vigorously and act on it when you find it. And you can’t look around for people to agree with you. You can’t look around for people to even know what you’re talking about.

You have to think for yourself. And if you do, you’ll find things.

Charlie?

Charlie Munger: Yeah, the hard part of the process for most people is the first $100,000. If you have a standing start at zero, getting together $100,000 is a long struggle for most people. And I would argue that the people who get there relatively quickly are helped if they’re passionate about being rational, very eager and opportunistic, and steadily underspend their income grossly.

I think those three factors are very helpful.

Warren Buffett: I used to do it by doing a lot of reading. I practically lived at the Omaha Public Library for three or four years when I was 9 or 10 or 11. I mean, anything you do to improve your own skills, you never know where it’s going to pay off later on. There’s nothing like working to improve your own skills. And I would say communication skills are the first area I would work on to enhance your value throughout life, no matter what you do. If you get lucky, you find your passion early on. But you want to work at something you’re passionate about, and then you want to work to improve your skills in that. And I think if you do both of those things, I think you’re likely to do very well.

Warren Buffett: But the advice I would give is to read everything in sight and to start very young. It’s a huge advantage in almost any field to start young. And if that’s where your interest lies, and you start young and you read a lot, you’re going to do well. It’s all out there in black and white. It’s a simple business. It requires qualities of temperament way more than it requires qualities of intellect. You do need a certain temperament that enables you to think for yourself. And then you have to develop a framework, and I developed it from reading Ben Graham. I didn’t come up with it myself. Very simple framework. And then you have to look for opportunities that fit within that framework as you go through life, and you can’t do something every day. You can learn every day, but you can’t act every day. And if you enjoy the game, you’ll find that, like playing bridge or playing baseball or whatever. And if you don’t enjoy it, you probably won’t do well on it. But I would advise you to start early, read everything in sight, look for the successful framework that’s been successful for people. And there’s nothing like Graham’s, in my view. And you’ll have a lot of fun, and you’ll probably make a lot of money.

Warren Buffett: Well, if you’re interested in business, I definitely think you ought to learn all the accounting you can. By the time you’re in your early 20s, accounting is the language of business. Now, that doesn’t mean it’s a perfect language, so you have to know the limitations of that language as well as all aspects of it. So I would advise you to learn accounting, and I would advise you to be, in terms of part-time employment or anything else, work at a number of businesses. There’s nothing like seeing how business operates to build your judgment in the future about businesses. When you understand what kind of things are very competitive and what kind of things are less competitive and why that works that way, all of that adds to your knowledge. So I would do a lot of reading. If you’re interested in investments, A, I would take the accounting courses. I do a lot of reading about investments, and I would get as much business experience. I would talk business with people that are in business to find out what they think makes their operation tick or where they have problems and why. I just think you just kind of sop it up every place that you can, and if it turns you on, you’ll do well in it. I mean, I think that if certain activities grab different people, but if business is of interest to you, my guess is you’ll do well. And if you do, if you understand business, you understand investments. Investments are simply business decisions in terms of capital allocation.

Charlie?

Charlie Munger: Yeah, there’s also the little matter of underspending your income year after year after year. Which we have mastered. Yeah. That really works if you keep at it.

Warren Buffett: Start saving early. It’s a great habit to have.