Warren Buffett is certain he could earn a whopping 50% per year if he had less than $1 million. Here's how

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The Oracle of Omaha is renowned for generating oversized returns. From 1965 to 2023, his company delivered compounded annual gains of 19.8% — with a whopping 29.56% return in 2024 — substantially outperforming the S&P 500’s 10.1% average annual return during the same period.

Today, Berkshire Hathaway’s (BRK-B) stock portfolio totals over $331 billion. And Warren Buffett believes he could once again build massive wealth by starting relatively small, as he did in the 50s.

In 1999, he told Bloomberg Businessweek, “The highest rates of return I’ve ever achieved were in the 1950s. I killed the Dow. You ought to see the numbers,” he said.

And he was confident that he could do it again, stating, “I think I could make you 50% a year on $1 million. No, I know I could. I guarantee that.”

Twenty-six years later, that confidence hasn’t been shaken. Here’s how Buffett would do it.

Moody’s Manual was a series of publications by financial services company Moody’s on publicly traded stocks. These texts provided detailed information on various industries, companies and securities.

“I found all kinds of interesting things when I was 20 or 21,” Buffett said.

He was able to acquire extensive knowledge of how different industries and companies functioned, even little-known ones, thanks to his dedicated research. He believes this type of behavior can provide an edge.

“I don’t know what the equivalent of Moody’s Manual or anything would be now, but I would try and know everything about everything small, and I would find something,” he said.

Modern platforms like Moby are the equivalent. Their team of former hedge fund analysts and experts spend hundreds of hours each week sifting through financial news and data to provide top-tier stock picks and crypto reports to keep you up-to-date on what’s moving the markets.

Moby’s superior research can help you reduce the guesswork when selecting stocks and ETFs. In four years, across almost 400 stock picks, their recommendations have beaten the S&P 500 by almost 12%, on average.

With their easy-to-understand formats, you can become a wiser investor in just five minutes, backed by a 30-day money back guarantee.

When you’ve studied up like Buffett, platforms like Public make it easy to invest in dividend stocks and ETFs.

Public not only offers commission-free trading but also provides a high-yield account where you can park your cash between investments. Public also has social features, enabling users to follow and learn from other investors, share ideas, and stay updated on market trends with real-time insights — kind of like its own internal Reddit community.

If you want to compare more options, you can also check out Moneywise’s list of the Best Investing Apps of 2024 to find the best fit for you and your portfolio.

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Keep in mind that Buffett’s answer is what he would do, not necessarily what the average person should do. He considers investing to be his passion, and has previously expressed that stock picking is not an optimal strategy for average investors.

In fact, at Berkshire Hathaway’s 2021 shareholders meeting, Buffett stated, “I do not think the average person can pick stocks.”

Instead, he has repeatedly said that most people should invest their money in a low-cost, S&P 500 index fund.

If you are on the lookout for an easy way to invest, consider signing up with Acorns, an automated investing and saving platform that simplifies the process of investing and setting aside extra funds.

By signing up and linking your bank account, Acorns automatically rounds up the price to the nearest dollar and deposits the difference into a smart investment portfolio for you, allowing you to grow your wealth without even thinking about it.

Plus, Acorns lets you customize how you save. With an Acorns Silver plan, you get access to Acorns Later, a retirement investment account with a 1% IRA match on new contributions. With Acorns Gold, you get a 3% IRA match on new contributions, an investment account for your kids, and the ability to customize your portfolio by selecting your own stocks.

As Buffett stated, if he had to start with just $1 million today, he would arm himself with knowledge by going through today’s equivalent of Moody’s Manual in detail to find opportunities — including ones that may not be suitable for large funds.

You can still find these texts today — they are called Mergent Manuals. Mergent, Inc. acquired Moody’s Financial Information Services division in 1998.

Investors today can also take advantage of tools and resources that didn’t exist when Buffett first started investing, such as internet databases.

For example, the EDGAR database from the U.S. Securities and Exchange Commission allows investors to access detailed filings and reports submitted by publicly traded companies.

While the investing legend believes a 50% annual return is achievable, he acknowledges it requires more than just ambition.

“With $1 million, you could earn 50% a year, but you have to be in love with the subject. You can’t just be in love with the money,” he explained. “People find other things in other fields because they just love looking for them.”

If you’d like to invest but aren’t yet sure what your risk tolerance or investing goals are, you should consider hiring an expert to help.

Advisor.com is an online platform that connects you with vetted financial advisors. Just answer a few quick questions about yourself and your finances, and the platform will match you with experienced financial professionals best suited to help you understand how to invest your savings and grow your wealth.

You can view the advisors’ profiles, read past client reviews, and schedule an initial consultation for free, with no obligation to hire.

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.