TEN WAYS TO INVEST YOUR ISA LIKE WARREN BUFFETT IN 2025

Key takeaways

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• Warren Buffett is an investing legend who has built up a fortune over decades. 
• He lives frugally and looks for deals when it comes to stocks.
• He’s made his name by buying great businesses at a good price and holding them for the long term.

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If you’re planning ahead and wondering where to invest your ISA in 2025, where better to draw inspiration than investing legend Warren Buffett?

‍According to Forbes, he’s currently the world’s seventh richest man with a staggering total wealth of $145 billion. That’s enough to purchase Manchester City 26 times over, with a cool £3 billion to spare. 

However, unlike most of the world’s wealthiest billionaires, Buffett is not a tech entrepreneur or a retail magnate. Instead, he amassed his fortune from investing. Not too bad for someone who started at age 11 with just six shares for $38 each.

So, what are the secrets to Buffett’s success, and what can we learn about investing? Here’s ten ways to invest like Warren Buffett in 2025.

1. Invest first, spend later

Buffett’s first principle of investing is to put it at the top of your to-do list. After covering regular expenses like bills and groceries, investors should put investing before other discretionary spending, Buffett argues, prioritising the future before splashing out on the present.

Despite his billions, Buffett is famously frugal, living in the same house since 1958 and eating a McDonald’s breakfast most days.

It’s a mindset thing, according to Buffett. He says investors need to be careful with their spending and prioritise their future financial freedom.

“Do not save what is left after spending, but spend what is left after saving,” he says.

If you’re an ISA investor looking to build your wealth in 2025, sitting down over Christmas and working out a simple budget could be a valuable step toward boosting your future wealth.

2. Invest for the long term

Perhaps Warren Buffett’s biggest investing secret is time. The “Oracle of Omaha” began investing young and has been busy adding to his stocks for over 70 years. He’s a living example of the power of investment compounding. 

Remarkably, his wealth truly skyrocketed only after age 65, with 99% accumulated after his normal retirement age. “If Buffett retired at age 65, you would have never heard of him,”  Morgan Housel explains in his bestselling investing tome, “The Psychology of Money.”

But you might have noticed that Buffett isn’t too keen on retirement. And at 94, those additional 30 years have catapulted Buffet into the wealthy superleague.

For ordinary investors, it’s an important reminder to get started investing, regardless of your budget. Amounts you stash in your ISA in your 20s, 30s, and 40s can set you up for greater financial security and freedom in the future.

3. Buy and hold

Buffett is the ultimate “buy and hold” investor. He believes in finding the right stock and owning it for the long haul. "If you don't feel comfortable owning something for 10 years, then don't own it for 10 minutes," says Buffett.

For Buffett, this means looking for a quick investing fix doesn’t work. Instead, he looks far ahead, wanting to be confident that a business will be profitable for the next 10, 20, or 30 years.

4. Focus on value and quality

As a “value” investor, Buffett seeks out stocks he believes are underpriced and have the potential to outperform in the future. He looks for “quality” companies with a proven record, good management, and a strong financial record. In other words, buying the right quality company for the right price.

'It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price,' he explains.

He looks at a range of data to value stocks including expected future profits, who manages the company, the future potential for that sector and, crucially, the company’s competitive advantage.

5. Look for a competitive advantage

To ensure long-term growth, Buffett focuses on companies with a competitive advantage that helps them outperform rivals. He famously described this as a competitive “moat” that protects a business’s profits.

"What we're trying to do," he explained, "is we're trying to find a business with a wide and long-lasting moat around it … protecting a terrific economic castle with an honest lord in charge of the castle."

To become King or Queen of the investing castle, you need to search out companies with a durable competitive advantage that will help them continue to build profits in the future.

6. Stick to what you know

Despite his vast investing knowledge, Buffett argues that you should stick to what you know. “To invest successfully, you need not understand every company or industry, but rather only those that fall within your circle of competence,” he explains. 

For Buffett, that meant avoiding tech companies for many years until he was sure of their future potential. He famously steered clear of tech giant Apple until 2016, when he became confident in its future. It later became one of his biggest holdings.

This is a great principle to apply to your ISA. Doing your research and sticking with companies and ETFs you understand, can help you make smarter investing decisions.

7. Build in a margin of safety

When picking stocks, Buffett aims to build in a “margin of safety” to provide a buffer against mistakes and underperformance.

“We look for three things when we buy stocks: a business we understand, management with integrity we trust, and a price that gives us a significant margin of safety,” he explains.

Buffett seeks out companies where his analysis reveals the intrinsic value is higher than the stock price, with some room to spare. This gives some wriggle room as a buffer against stock market declines or overly optimistic projections, protecting investors from potential losses.

"A too-high purchase price for the stock of an excellent company can undo the effects of a subsequent decade of favourable business developments," he warns.

8. Keep calm and carry on

As a long-term investor, Buffett is relaxed about stock market volatility. He believes that low prices often offer exceptional opportunities.

"The true investor welcomes volatility,” he explains. “A wildly fluctuating market means that irrationally low prices will periodically be attached to solid businesses.” 

A stock market crash can often provide investors with opportunities because great companies are priced under their potential true value.

As he memorably put it, "Be fearful when the markets get greedy, be greedy when the markets get fearful." 

9. If in doubt, go passive

Buffett advises investors without deep market knowledge to keep it simple. If in doubt then he suggests investing in a low-cost passive index fund.

In his characteristically blunt fashion he explains that, “By periodically investing in an index fund, for example, the know-nothing investor can actually out-perform most investment professionals.”

Investing doesn’t need to be complicated and a simple global index tracker will automatically invest in the world’s largest companies. It’s a great way to take advantage of long-term investment compounding and build ISA wealth.

‍10. Don’t expect perfection

Despite his years of investing experience, it’s important to remember that even Warren Buffett doesn’t always get it right.

In 2022, he revealed in an annual meeting for his investment company Berkshire Hathaway, that he has made mistakes with market timing. “We have not been good at timing,” he admitted. “I totally missed, you know, March of 2020,” he revealed.

It turns out even Warren Buffett doesn’t have a crystal ball. “We haven't the faintest idea what the stock market is gonna do when it opens on Monday — we never have,” he said.

Luckily, you don’t have to get everything right to build money for the future. It’s doing the simple things repeatedly over time that sets you up for the future.

As Buffett says, "You don't need to have extraordinary effort to achieve extraordinary results. You just need to do the ordinary, everyday things exceptionally well."

For everyday ISA investors, it’s an important reminder of those simple investing basics. Just getting started, investing consistently, and being patient will put you on track for a brighter financial future.

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