How to invest £500 in 2025 like billionaire Warren Buffett

Anyone new to investing can learn a lot from the sound advice of Warren Buffett. The 95-year-old billionaire is considered the worldâs greatest investor, transforming his firm, Berkshire Hathaway, into a $1.1trn super-giant, despite only starting with just $105,100 in 1956.

Having a hundred grand to kick-start an investing journey is undoubtedly advantageous. Yet, Buffettâs strategy and tactics are still applicable for even the tiniest of investors starting with just Â£500 today.

So how can new investors take this small lump sum and transform it into something far more substantial?

Two vital lessons

There are two key lessons from Buffett that every novice investor needs to know, in my opinion:

âRule #1 is never lose money. Rule #2 is never forget Rule # 1â.
âEvaluate companies within your circle of competenceâ.

Not every investment Buffett has made has been a success. In fact, there have been some painful mistakes over the years. But by being informed, having some healthy scepticism, and avoiding speculative or reckless investments, the risk of making painful errors can be drastically reduced. Thatâs how Buffett applies his âRule #1â.

The second bit of advice is equally as important. Investors donât need to buy shares in complex bleeding-edge sectors like biotech or exploration-stage mining to make money. Instead, Buffettâs always stuck to the industries that are easy to understand. And some of his most successful investments, like Coca-Cola, have come from these simple sectors.

In other words, by investing exclusively in industries and companies that are easy to understand, investors can drastically reduce risk from ignorance.

Applying his teachings now

With all that said, what are some shares that new investors can consider for potentially solid long-term returns?

There are never any guarantees with any investment since even the most promising of enterprises have to navigate unique risks and challenges. Having said that, one UK Buffett-style stock that Iâve got my eye on right now is Premier Foods (LSE:PFD).

Premierâs business model is as straightforward as they come. It buys raw ingredients, manufactures food products, and then leverages its branding power to sell them at a premium. And today, 89% of British households buy at least one of its products each year, with an estimated 70% repeat customers.

In other words, the firmâs brands often find themselves on familiesâ weekly shopping lists. And with international expansion efforts underway in Australia, Europe, and North America, managementâs seeking to replicate its UK success abroad.

Is this a high-growth enterprise? No. Is it a highly cash-generative business leveraging its competitive advantages to steadily compound its bottom line? Yes. And with management shoring up the balance sheet over the last five years, the stockâs already more than doubled the performance of the FTSE 100 since 2020.

The bottom line

Premier Foods still has to deal with the threat of inflationary input costs. While having strong brands certainly helps in passing these costs to customers, weak economic conditions still present a challenge, resulting in both growth and margin pressure.

Nevertheless, with a proven competitive moat, a discounted valuation, and a long-lasting business model, Premier strikes me as a classic Buffett-style stock to consider. And itâs not the only one, Iâve got my eye on right now.

The post How to invest Â£500 in 2025 like billionaire Warren Buffett appeared first on The Motley Fool UK.

Should you invest Â£1,000 in Premier Foods plc right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Premier Foods plc made the list?

See The Six Stocks

More reading

Zaven Boyrazian has no position in any of the shares mentioned. The Motley Fool UK has recommended Premier Foods Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.