Warren Buffett built one of history\u2019s great fortunes not through complex strategies or insider advantages, but through principles anyone can follow. His advice to the middle class has been remarkably consistent across decades of shareholder letters, Berkshire Hathaway annual meetings, and interviews.<\/p>\n
The purchases he recommends aren\u2019t exotic or expensive. They\u2019re decisions are ones that most people can make starting today, and every single one is backed by their own performance over a lifetime of wealth building.<\/p>\n
1. Low-Cost S&P 500 Index Funds<\/p>\n
Buffett has spent decades telling ordinary investors who have no interest in research or active investing to skip stock picking and buy index funds instead. In his 2013 Berkshire Hathaway shareholder letter, he wrote that \u201ca low-cost index fund is the most sensible equity investment for the great majority of investors.\u201d This isn\u2019t casual advice. Buffett specified in his own will that 90% of the cash left to his wife should be invested in a low-cost S&P 500 index fund.<\/p>\n
His point is that trying to beat the market usually means underperforming it. He famously won a million-dollar bet that an S&P 500 index fund would outperform a selection of top hedge funds<\/a> over a decade.<\/p>\n Most people would build substantial wealth simply by capturing the market\u2019s long-term return consistently, rather than chasing higher returns and getting lower ones. The middle class can\u2019t outsmart Wall Street, but they don\u2019t need to. They need to own the whole market cheaply and stay the course.<\/p>\n 2. Education, Skills, and Books<\/p>\n Buffett has called knowledge the best investment a person can make, particularly early in life. At the 2023 Berkshire Hathaway annual meeting, he told the audience: \u201cThe best thing you can do is to be exceptionally good at something. Whatever abilities you have can\u2019t be taken away from you. They can\u2019t actually be inflated away from you. So, the best investment by far is anything that develops yourself, and it\u2019s not taxed at all.\u201d<\/p>\n His own life proves the principle. Early in his career, Buffett took a Dale Carnegie public speaking course because he was terrified of speaking in public. He credits that course as one of his best investments because it permanently increased his earning power by improving his communication skills.<\/p>\n Skills compound faster than capital when you\u2019re just starting. A $500 course that increases your income by $10,000 a year delivers returns no stock can match. The middle class often overlooks this because it doesn\u2019t feel like a \u201creal\u201d investment, but Buffett considers it the single most important one.<\/p>\n 3. A Modest Home You Can Afford<\/p>\n In his 2010 letter to Berkshire Hathaway shareholders, Buffett wrote: \u201cHome ownership makes sense for most Americans. All things considered, the third best investment I ever made was the purchase of my home, though I would have made far more money had I instead rented and used the purchase money to buy stocks.\u201d He bought his Omaha home<\/a> in 1958 for $31,500 and still lives there today despite being worth over $147 billion.<\/p>\n But Buffett\u2019s endorsement of homeownership comes with a sharp warning. In that same letter, he wrote: \u201cOur country\u2019s social goal should not be to put families into the house of their dreams, but rather to put them into a house they can afford.\u201d The lesson isn\u2019t just to buy a home. It\u2019s to buy one that doesn\u2019t destroy your ability to invest everywhere else.<\/p>\n The middle class often stretches for the maximum mortgage a lender will approve, leaving nothing for wealth-building investments. Buffett\u2019s approach is the opposite: buy modestly, live below your means, and redirect the difference into assets that compound over decades.<\/p>\n 4. Time in the Market Through Early and Consistent Investing<\/p>\n Buffett\u2019s most valuable purchase is something the middle class can afford right now: time. At the 1999 Berkshire Hathaway annual meeting, he explained his wealth-building formula by saying, \u201cWe started building this little snowball on top of a very long hill. So we started at a very early age rolling the snowball down.\u201d He has also described the stock market as \u201ca device for transferring money from the impatient to the patient.\u201d<\/p>\n