Warren Buffett Has One Warning Before You Make This Investment Mistake

Warren Buffett knows a thing or two when it comes to investing. As the chairman and CEO of Berkshire Hathaway, Buffett has made a number of legendary bets, including holding Apple stock for nearly a decade and netting over $70 billion along the way. Despite his keen eye for opportunity, his ability to avoid mistakes is just as legendary. Despite not offering much investing advice, one of Buffett’s best known warnings is to not overcomplicate investing. In a 1989 letter to Berkshire Hathaway shareholders, Buffett stated, “After 25 years of buying and supervising a great variety of businesses, Charlie [Munger] and I have not learned how to solve difficult business problems. What we have learned is to avoid them.”

In the late ’90s, Buffett followed this advice and famously chose not to invest in technology stocks. Known as the dot-com bubble, this period saw many companies and investors chasing after largely unsustainable trends rather than focusing on the fundamentals of investing. When the bubble burst in the early 2000s, investors lost trillions of dollars, but Berkshire and Buffett were spared as he chose not to follow the trend largely because he was skeptical of the industry.

Read more: Small Bets That Paid Off Big Time

For everyday investors looking to build wealth or save for retirement, Buffett’s advice of avoiding unnecessary complexity can be very practical and lead to good returns. For investors, it can mean leaning on tools like index funds, mutual funds, or ETFs, all of which offer good diversification. Buffett himself has also repeatedly praised this investing method: Among Buffett’s various money tips and tricks, he’s specifically advised people to invest in an S&P 500 index fund instead of individually picking stocks.

Another straightforward strategy is dollar-cost averaging. This practice involves making regular contributions to an investment account, regardless of market performance. Over time, this method can protect against volatility and get individuals used to setting money aside for investing. If you’re new to investing, you can instead use the Rule of 25x, which requires only one calculation, and could be a good way to determine the amount of savings you will need during retirement. These approaches are just a few of the many simple investing strategies that don’t overcomplicate the basics but can still lead to long-term wealth.

Unlock your financial potential. Add Money Digest to your preferred sources for smart money insights!

Read the original article on Money Digest.