Warren Buffett is not only recognized as one of the wealthiest individuals on the planet, but also as one of the most renowned and successful investors in history.

As the founder of Berkshire Hathaway, Buffett's net worth has reached an astounding 152 billion US dollars, which is roughly equivalent to 2,459 trillion Indonesian rupiah (using an exchange rate of Rp 16,179 per USD).

Nicknamed the “Oracle of Omaha,” Buffett is widely respected for his long-term investment strategies. He is equally dedicated to sharing his investment wisdom with everyday investors, especially those who are just starting out.

Below are several investment principles from Warren Buffett that are especially helpful for beginners, as reported by Fast Company on Sunday (June 29, 2025).

1. Invest Only in What You Understand

Buffett once famously advised, “Never invest in a business you cannot understand.”

In his 1996 shareholder letter, he elaborated on the idea of a “circle of competence”—the areas where an individual has sufficient knowledge and insight to evaluate businesses accurately.

“You don’t need to be an expert on every company or even many companies,” Buffett stated.
“You only need to be able to assess the ones within your circle of competence. The size of that circle is not important; knowing its boundaries is,” he added.

For instance, Buffett initially avoided tech stocks because he felt he couldn’t properly assess their business models.

During the 2019 Berkshire Hathaway shareholders meeting, he encouraged investors to learn about many types of businesses, then determine which ones they truly understand. That, he claimed, would already put them ahead of most investors.

If you're building your investment portfolio, sticking to what you know is key.

This allows you to independently evaluate each company and accurately interpret new developments over time.

In contrast, if you invest based solely on someone else’s recommendation, you rely entirely on their judgment—which might not be as sound as it appears.

2. Avoid Unnecessary Activity

“You’re not paid for activity, you’re paid for being right,” Buffett stated in 1998.

As a beginner, you might feel compelled to react quickly to market news or sudden changes in your portfolio. It’s easy to panic when stock prices fall by 5% or more in a single day.

Buffett teaches the importance of patience. If you’ve invested in companies you believe will thrive long term, short-term market noise shouldn’t shake you.

“Inactivity, in our opinion, is intelligent behavior,” he wrote in his 1996 shareholder letter.

As long as you invest in companies that are strong and well-managed, there’s little need to trade frequently unless those core qualities change.

Stocks and the market, in general, tend to appreciate over time.

Frequent trading can lead to buying back shares at higher prices, missing out on dividends, paying more in transaction fees, or losing long-term growth potential.

3. Make Every Investment Count

In a 1994 speech at USC Marshall School of Business, Charlie Munger—Buffett’s longtime business partner—shared that Buffett believes most investors would perform better if they were given a “punch card with only 20 slots,” representing the total number of investments they could make in their lifetime.

This philosophy echoes Buffett’s broader investment principles: discipline, patience, and intentional decision-making.

Limiting yourself to just 20 investments forces you to be thoughtful and avoid rash decisions on businesses you don’t fully understand.

It also means you must be confident enough in every choice to accept that passing on other opportunities won’t be a regret.

Buffett stated in 1996 that investors should aim to buy shares only in businesses that are almost certain to be more profitable in the next 5, 10, or even 20 years.

This persistent and deliberate approach has made Buffett one of the richest people in the world—and it can be a powerful roadmap for anyone building their own investment portfolio.