When looking at other investors, Warren Buffett is in a league of his own. Known as the “Oracle of Omaha,” the chairman of Berkshire Hathaway has made calculated decisions that have increased Berkshire’s Class A shares by almost 4,100,000% since 1965.
Most people would get noticed for making these vast increases in portfolios. People ask how they could do the same and become rich, but Warren Buffett is in a league of his own and follows simple principles when he makes decisions.
Load Error
Both Buffett and Charlie Munger suggest that 90% of people should invest in an index fund that tracks the S&P 500 and buy and hold for a long time. That fund will bring out significant diversification in your portfolio.
Then people see what Buffett and Munger do and want to copy it. The Buffett method is to hold a few companies that have strong earnings, reliable dividend payments, and sound corporate governance. Then Buffett holds those companies for a very long time. These five American stocks hold 77% of Warren Buffett’s Portfolio.
1. Apple $150.98 Billion (46.44%)
If you see that over 46% of Buffett’s portfolio is concentrated on Apple, you may think he could be some fool placing a bet like that. It is not a foolish mistake. Apple has the largest market cap of any company in the world. It is considered the best brand in the world.
Items like the iPhone have been dominating the market for over 16 years. The top 4 four phones in 2023 are all iPhones, and they only produce four new phones yearly. With innovation, Apple has created a company entwined into our society.
People wear Airpods, Apple watches, use their iPhones, and now will be putting money into Apple savings accounts. With each new product comes more stability within the company for the long haul. Warren Buffett makes a wise choice by choosing Apple.
2. Bank of America $29.54 Billion (9.09%)
Apple may be the largest holding in Buffett’s portfolio, but it is not the only sector he is involved in. Buffett enjoys the financial sector much more. The evidence can be seen in his large allocation to Bank of America.
Banks and financials are a cyclical market. The market may swing up and down with interest rates and many other attributes, but banks will continue to make money on loans and deposits.
Many banks have been hit hard with higher interest rates, but Bank of America has been flying high. The variable interest rates loans have helped bring in billions in profits, and once those rates go back down, there will be a time of expansion. When economies are roaring, it is suitable for banks to help fund those corporations and small businesses.
It comes with a nice dividend as well. More dividends mean more cash flow. Bank of America has a dividend yield sitting at around 3.08%. That is not a lousy dividend yield at all.
3. American Express $25.01 Billion (7.69%)
American Express makes up Buffett’s third-largest holding. It is one of Buffett’s long-lasting holdings that was purchased in 1993 and had an unrealized capital gain of over 1,700%, not counting dividends.
American Express makes money in two different ways. It primarily makes money through credit card transactions. As the number three largest credit transaction company in the U.S., the money comes from merchant fees.
10 Frugal Living Tips From Warren Buffet That Can You Save You Big – The Frugal Expat
You Don’t Need To Upgrade to a Bigger House
You may have heard the saying, “Keeping up with the Joneses.” This refers to the common practice of buying a bigger and better house, car, or gadget to keep up with your neighbors.
However, Warren Buffet says this is a surefire way to waste money. Instead, he advises that you don’t have to upgrade your house and can live comfortably in a modest home. Buffet still lives in the same house he bought back in the 1950s.
He believes that when it comes to homes, focusing on functionality and practicality is more important than luxury. So, resist the urge to upgrade to a bigger house if you don’t need it, and you’ll be able to save a significant amount of money over time.
Eat Cheap And Convenient Food Options
When it comes to food, Warren Buffet also advocates for frugality. Instead of frequenting fancy restaurants or buying expensive ingredients, he suggests choosing cheap and convenient food options.
Look for affordable yet healthy options, such as frozen vegetables, canned goods, and bulk grains. Plan meals to make the most of these cheaper options and avoid impulsive takeout orders.
Buffet also recommends skipping the fancy coffee and making your own at home, saving you hundreds of dollars a year. Eating cheap and convenient food options doesn’t mean sacrificing taste or nutrition, so give it a try and watch your savings accumulate.
Buy Quality, Not Brand
Warren Buffet advises focusing on quality rather than brand names when it comes to shopping. Don’t be fooled by flashy ads or designer labels, as they often come with a price tag.
Instead, research and invest in high-quality items that will last longer and save you money in the long run.
This applies to everything from clothing to electronics to furniture. By buying based on quality rather than just brand, you can avoid overspending and find great deals on reliable products.
Don’t be Afraid to Use Coupons in Front of Your Friends
Warren Buffet believes that every penny counts when it comes to saving money. This is why he encourages people to use coupons, even if it means doing so in front of their friends.
Don’t be embarrassed or hesitant to use coupons when shopping, as they can help you save significant money in the long run.
Whether you’re using physical coupons or digital ones, taking advantage of them is essential whenever possible. After all, being smart with your money is nothing to be ashamed of.
Do Not Gamble
Warren Buffet is famously known for his hatred of gambling. He believes it’s a waste of time and money, and it rarely pays off.
Whether it’s in a casino or the stock market, Buffet advises against gambling and instead focuses on making wise investment decisions based on research and analysis.
It’s important to remember that gambling is based on chance and luck, which can lead to significant financial losses. So, avoid gambling and make wise financial decisions that will help you save and grow your wealth.
Don’t Upgrade Your Possessions Unless it’s Necessary
Buffet advises against upgrading your possessions unless it’s necessary. This means holding onto your current car, phone, or furniture as long as they’re still functional and not in need of replacement.
Upgrading unnecessarily can lead to overspending and financial waste. Buffet believes it’s more important to value utility and practicality rather than keep up with the latest trends or flashy possessions.
Eat Cheap But Healthy
Warren Buffet knows the importance of balancing a healthy diet with frugal living. He advises eating cheap but healthy foods such as fresh produce, grains, and proteins – looking for sales and buying in bulk to save money on groceries.
Additionally, cooking at home can save you a significant amount of money while ensuring you’re eating nutritious meals.
Avoiding processed foods and drinks can also be a healthy and cost-effective choice. By incorporating cheap but healthy foods into your diet, you can save money while maintaining your health and well-being.
Don’t Take Unnecessary Debt
Taking on unnecessary debt can significantly burden your finances and prospects. Instead of splurging on luxuries, living within your means and avoiding high-interest loans or credit cards is better.
Don’t compromise your financial stability for short-term pleasure. Focus on saving for future goals or a rainy day, and only take out loans for necessary expenses. Taking on debt can limit your ability to invest and save, which can hinder your financial growth in the long run.
Invest as Soon as You Start Earning
One of the best frugal living tips from Warren Buffet is to start investing as soon as you start earning. Whether it’s putting money into a retirement fund or investing in stocks, starting early can significantly impact your financial growth.
The power of compounding interest means that the earlier you start investing, the longer your money has to grow.
Don’t wait until you’re older or have more money to start investing; make it a priority from the beginning. Investing early can save a considerable amount of money in the long term.
Don’t Spend Money On Things You Don’t Need
One of his famous frugal living tips is to avoid spending money on things you don’t need. Often, we get carried away by our impulses and spend on things we don’t need.
By avoiding unnecessary expenses, we can save significant money that can be invested for better returns.
Therefore, the next time you think of spending on something you don’t need, remember Warren Buffet’s advice – don’t spend money on things you don’t need.
Conclusion
These 10 frugal living tips from Warren Buffet will help you save and grow your wealth over time. From avoiding unnecessary debt to investing early, these simple pieces of advice can significantly impact your financial future. So take these tips from the world’s greatest investor and start your journey towards building wealth today. By following these tips and creating intelligent financial habits, you’ll be well on your way to achieving financial success.
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I’m Steve. I’m an English Teacher, traveler, and an avid outdoorsman. If you’d like to comment, ask a question, or simply say hi, leave me a message here, on Twitter (@thefrugalexpat1). Many of my posts have been written to help those in their journey to financial independence. I am on my journey, and as I learn more I hope to share more. And as always, thanks for reading The Frugal Expat.
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15/15 SLIDES
American Express also makes money through lending money. So it earns money from interest payments and credit card fees.
What makes American Express such a great asset in Buffett’s portfolio is its strategy to go after high-income consumers. When economies crash or go into recession, high-income consumers will continue to spend money. It means there will be less disruption in the cash flow.
4. Coke Cola $24.81 Billion (7.63%)
Coke-Cola is Warren Buffett’s fourth largest holding and Berkshire Hathway’s longest-held stock. Buffett has been holding onto Coke-Cola since 1988. What makes Coke Cola such a great company to hold?
It is a consumer staple that is world-renowned. It operates in almost every country and consistently tries to create connections with new generations. Coke Cola also brings in over $1 Billion in revenue. If it is not creating new products, it consistently increases its dividends to the shareholders each year for over 61 years.
Coke Cola may not be a growth company like Apple or a financial company like Bank of America or American Express. Still, it is a product that everyone knows, like McDonald’s. It has a great brand like Apple. Plus, it consistently brings in cash flow.
5. Chevron $21.60 Billion (6.65%)
Chevron comes on this list as number 5 in Buffett’s portfolio. It is an energy stock, and you may wonder why Berkshire Hathaway would be investing in energy stocks. That is a great question.
Since the pandemic and Russia’s war in Ukraine, oil prices have soared slightly. The oversupply during the pandemic meant oil companies halted pumping out more; therefore, it could take a few years to get that volume up to pre-pandemic levels.
If oil prices fall, Chevron is still set up to create cash flow. It has an extensive network of pipes, refineries, and chemical plants. The latter two enjoy low costs and high outputs when oil prices are much lower. So Chevron has set itself up to continue to create income in the case of oil prices dropping.
A bonus is that Chevron continues to get cash back to its shareholders. It has increased its dividend every year for 36 years consecutively and looks to make some massive share buybacks to help improve the price of shares.
Final Thoughts:
Warren Buffett knows how to invest, and we can learn from how he invests. He is not perfect, and he knows that. He has learned something from investing and makes wise decisions based on experience. You may not be interested in these five stocks, or they may be a bit overpriced, but Buffett says, “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”
Find those good companies at fair prices, and you could make a good portfolio or invest in a simple S&P 500 ETF like SPY or VOO. Buffett holds both of those ETFs in his portfolio too.
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11 Frugal Ways to Save Money That Most People Don’t Realize – The Frugal Expat
Take Good Care of Things You Own
Taking care of your stuff is one way to make your things last longer. A poster said, “Take good care of the things you currently own and use them for as long as you can. Buy replacement things less often. Cars, phones, clothes, etc.” The better you can take care of your valuables, the longer they last, and the more money you can save.
Budget for “Fun Money”
Most people budget for the necessities of life like rent, food, clothing, and transportation, but do you ever budget for fun money? One poster suggested, “if you are being super careful with money and don’t do anything fun…it gets old. And then you make some silly expensive purchase that maybe you can’t undo.” If we constrain ourselves, we could go a little wild and waste a ton of money. So always budget for some fun money.
Forget About Black Friday Sales
Black Friday sales are great if you are looking for a specific item and it gets marked down, but many people buy things they don’t even need and waste money. It’s better to forget about them if you do not need anything.
Pack lunch
Packing a lunch can save so much money. You can make a sandwich way cheaper than buying one from a deli or cafe. One poster commented, “Cooking your own food, in general, is a good way to save money in addition to being able to customize everything to your taste and knowing exactly what goes into the food.” That is an excellent point about making your food how you want it, plus it cuts down on food costs.
Go Shopping on a (Very) Full Stomach
So many people go to the grocery store hungry. It means you buy things just because you need and want to eat. If, instead, you go to the store when you are full, you will be more likely to buy the things required. A poster said, “You’d be surprised at how little junk food you walk out with.” Saving money on food is a great plan.
Buying in Bulk for Food
Costco, Sam’s Club, and many other wholesale warehouses can be great places to buy in bulk. One poster recommended, “Most dried foods are much cheaper in a large sack. Same with meat, buy the bulk pack, portion it into smaller amounts, and freeze most of it.” Those tips can help on saving with your grocery bills.
Plan Your Meals and Grocery List Ahead of Time
It is said, “Failure to plan is planning to fail.” As you work on saving money, planning out your meals and grocery list ahead of time can cut out time and effort. It can also help you find the items that are on sale instead of going the day before purchasing what you need.
Ask Your Bill Companies How To Save on The Bill
Calling up your credit card company, insurance company, or other bill companies can help you save money. One poster shared his example, “I do this periodically, and there almost always is a way to lower bills. I just lowered my car insurance by $100 just by asking.” It is unique how one phone and asking can help lower your bills.
Get Water From Home
In many countries, beer can be cheaper than water. It saves bringing your water from home. A poster mentioned, “Nothing saves money more than bringing your water bottle places instead of paying for drinks or water!” Drinks can be expensive if bought every day. So bring your own.
Living With Family as an Adult
Living with family may be different from the cultural norm for many people. People all over the world do, and it can help save money. A poster commented, “If you need to live with your parents/relatives until you get a pay bump or a better job, do it.” Parents love their kids, and it beats going broke while trying to get something better.
Swallow Your Pride and Look for Creative Solutions
Often, many people do not think outside the box when saving. One poster gave several examples of creativity: “my brother got a perfectly good TV from a dorm dumpster. You can scour the thrift store for things new in packages that can pass for gifts.” You never know what you can find in a thrift store or someone’s garbage. So check that pride at the door and find something worth it.
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I’m Steve. I’m an English Teacher, traveler, and an avid outdoorsman. If you’d like to comment, ask a question, or simply say hi, leave me a message here, on Twitter (@thefrugalexpat1). Many of my posts have been written to help those in their journey to financial independence. I am on my journey, and as I learn more I hope to share more. And as always, thanks for reading The Frugal Expat.
