£10k to invest? I’d use the Warren Buffett method to get rich

first_img The high-calibre small-cap stock flying under the City’s radar Warren Buffett knows a thing or two about investing. He bought his first stock when he was only a teenager, and since then he has accrued a multi-billion pound fortune by investing in the stock market.Throughout his career, he has used a relatively simple investment strategy. He has acquired undervalued equities and then held on for as long as possible or until they no longer look cheap.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…Anyone can use this investment approach. Indeed, based on Buffett’s track record, it appears that by doing so, one may be able to achieve large investment returns from the stock market. And it’s the approach I would use if I had to invest £10,000 today. The Warren Buffett method Buffett or the Oracle of Omaha as he is sometimes known, doesn’t just target cheap stocks. He wants to buy high-quality businesses, that have a strong track record of creating value for investors. I think a handful of London-listed businesses fit his investment strategy. A.G. Barr is a great example. This soft drinks company has higher than average profit margins and has a good track record of reinvesting profits back into operations to drive growth. It also returns excess cash to investors with share buybacks and dividends, and the balance sheet is not overloaded with debt. I see similarities between this business and Coca-Cola, which has long featured in Buffett’s portfolio. Another stock that I think qualifies as a Warren Buffett type of investment is Games Workshop. The tabletop gaming business has high returns on invested capital, fat profit margins and a clean balance sheet. It also has a relatively defensive business model because it has no competitors. The company’s products are unique, and this puts it in a strong competitive position. Other firms may launch new games to try to steal customers, but they won’t be the same. In my opinion, that gives Games Workshop a substantial advantage, although we can’t ignore the risks of any future rivals finding a more appealing formula. Diversified fund If I felt really lazy, I could replicate the Warren Buffett method without picking individual stocks by buying a fund like the CFP SDL UK Buffettology fund. This seeks to invest in companies that exhibit the qualities outlined above. There are 58 holdings in the portfolio overall, and the largest is Games Workshop.Usually, I’m wary of investing in active funds because they can be an expensive way to invest. However, with this one, I’d be happy to pay its annual management charge of just under 1.2% based on its historical returns. The fund has doubled investors’ money over the past five years, more than doubling its benchmark index’s performance. In my opinion, its track record shows just how lucrative a Warren Buffett-style strategy can be, and that’s why I’d follow the Oracle’s approach when investing a large lump sum.  Image source: The Motley Fool Our 6 ‘Best Buys Now’ Shares Click here to claim your copy of this special investment report — and we’ll tell you the name of this Top Small-Cap Stock… free of charge! Simply click below to discover how you can take advantage of this. Adventurous investors like you won’t want to miss out on what could be a truly astonishing opportunity…You see, over the past three years, this AIM-listed company has been quietly powering ahead… rewarding its shareholders with generous share price growth thanks to a carefully orchestrated ‘buy and build’ strategy.And with a first-class management team at the helm, a proven, well-executed business model, plus market-leading positions in high-margin, niche products… our analysts believe there’s still plenty more potential growth in the pipeline.Here’s your chance to discover exactly what has got our Motley Fool UK investment team all hot-under-the-collar about this tiny £350+ million enterprise… inside a specially prepared free investment report.But here’s the really exciting part… right now, we believe many UK investors have quite simply never heard of this company before! Rupert Hargreaves owns no share mentioned. The Motley Fool UK owns shares of Games Workshop. The Motley Fool UK has recommended AG Barr. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.center_img £10k to invest? I’d use the Warren Buffett method to get rich Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. Rupert Hargreaves | Saturday, 23rd January, 2021 I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. Enter Your Email Address See all posts by Rupert Hargreaveslast_img