Warren Buffett’s top investment strategies for new investors

close-up photo of investor Warren Buffett

Image Source: The Motley Fool

Even new investors just starting out have probably already heard of Warren Buffett. There are probably thousands of articles out there detailing all the strategies one can use when looking to invest like him. But that can be quite overwhelming if you’re just starting out.

Today I will focus on the main strategies that new investors should pay attention to if they want to invest like Warren Buffett. This will provide a solid starting point for when you want to delve into the investment advice of the Oracle of Omaha.

Pay the debt

First of all, you’re not making money investing if you’re not paying down your debt. Warren Buffett has recommended in the past that investors should first pay off their high-interest debt before considering investing in the stock market.

This would probably mean paying off your credit card debt first, since these interest rates hover around 19%. However, with inflation and interest rates on the rise, credit card companies may raise interest rates in the next year or so. Therefore, it is prudent to pay it off as soon as possible.

Then, if you have other high-interest debt, pay that off, too. Otherwise, make sure you have a plan in place with your financial advisor to reduce things like mortgage payments, car payments, student debt, and more.

find value

Next, you’ll notice that Warren Buffett isn’t buying company stocks day in and day out. He takes the long-term approach, thinking long and hard about what he wants to buy. That’s because once Warren Buffett buys stocks, it’s rare for him to get rid of them entirely.

This is a value approach, where you find companies that have strong past performance, strong future growth and a stable balance sheet. This can be quite difficult to discover, so there is a trick to finding companies you want to invest in.

I recommend looking at what Warren Buffett invests in and trying to replicate this with similar Canadian stocks. You want to look at the last few quarters at least to see if the company has a lot of debt, has been paying it off, dividend payments, and stock growth. And again, all of that is long term, not just during the market downturn.

A recommendation

If you want to invest like Warren Buffett, you’ll notice that one of the industries he buys and has held for at least two decades is the construction and materials industry. Construction will always come, and the materials to build will always be needed.

Therefore, a company that I would consider is Teck Resources (TSX:TECK.B)(NYSE:TECK). The company is engaged in the exploration and production of natural resources. This includes steelmaking coal, copper, zinc and energy. It has operations throughout the world, offering diversification in its resources and location.

In addition, Teck stock ticks all the boxes. Its profits have risen higher and higher in recent years, beating analyst estimates. It offers a stable dividend yield of 0.93% and is trading at a handsome 6.57x earnings. The stock is up 38% so far this year, but is down 11% more recently on fears over inflation.

Bottom line

Once you pay off your debt, you can start investing like Warren Buffett by finding companies you think you can approve of. In this case, Teck stock is a good option for new investors to consider.


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