With no savings at 30, I’d use Warren Buffett’s 3 golden rules to build wealth (2024)

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When Warren Buffett offers advice investors around the world take note.

Warren Buffett didn't start life as a billionaire.

In fact, the world's most famous investor started his career with minimal savings, just like most of us.

Yet these days the 93-year-old CEO of Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) has a personal fortune worth north of US$120 billion.

And he achieved this by consistently employing some surprisingly simple golden rules.

So, if I was 30 with no savings, here are three Warren Buffett investing principles I'd stick with to build wealth for my retirement.

Set a little aside each month…and don't lose it!

First, it's important to begin setting aside a little money every month to invest in the markets.

Second, Warren Buffett's prime rule is "don't lose money".

As he famously said, "Avoid anything that will not increase your purchasing power over time."

Now, not every investment I make (or that the Oracle of Omaha has made) will gain in value. But as Buffett also advises, "Minimize your mistakes, but learn from the ones you make."

Preserving the capital you have in the markets today is the key to watching it grow over time.

Remember, if I lose 50% of my investment in a certain stock, I'll need to gain 100% down the road just to break even again.

So, I'll be sure to do thorough research or secure some expert advice, before buying my ASX shares.

Warren Buffett doesn't overpay

The second Warren Buffett golden rule I'll be following is, "Never overpay for anything."

Atop preserving my investment capital, I obviously also want to see it grow.

Now an index tracking fund would have done pretty well this past year.

In 2023 the S&P/ASX 200 Index(ASX: XJO) gained 9.3%. And the S&P/ASX 200 Gross Total Return Index (ASX: XJT), which includes reinvested dividends, gained 13.9%.

But by following Buffett's rule of targeting undervalued assets, with strong management teams and "unbreachable moats", I'd aim to beat the annual ASX 200 returns to generate long-term wealth.

And I wouldn't ignore the opportunities on offer in the United States markets either. Berkshire's top holding, after all, is Apple Inc (NASDAQ: AAPL), which has gained 419% over the past five years.

Time in the markets

Which brings us to the third Warren Buffett investment rule I'd follow to build my retirement wealth.

Time.

Buffett built his fortune by first achieving inflation-busting annual returns and then compounding these gains over many years. Since 1965 the Oracle of Omaha has delivered annualised returns of 19.8%. That's double the 9.9% gains from theS&P 500 Index(INDEXSP: .INX) over this same period.

The good news here is that regardless of my lack of savings, at 30 I'd have a lot of time to let the magic of compounding work in my favour.

Just what kind of magic are we talking about here?

Well, if I start with nothing and begin investing just $200 a month in the markets, and manage to achieve returns in line with what Warren Buffett has delivered, that will see me with $4.45 million in 30 years.

Time for an early retirement, perhaps?