No savings at 40? I'd use the Warren Buffett method to build wealth with ASX shares

Following Buffett's lead could make you a millionaire in the future.

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a smiling picture of legendary US investment guru Warren Buffett.

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If you don't have any savings at 40, don't panic. That's still plenty of time to build wealth with ASX shares.

For example, did you know that approximately 90% of Warren Buffett's fortune was generated after he turned 50?

In light of this, it could pay to take a leaf out of the Oracle of Omaha's book.

But how do we build wealth like Warren Buffett?

Well, the first step will be to start making consistent investments into ASX shares.

But it's important not to plough your money into just anything. You want to find high-quality businesses that have competitive advantages and positive outlooks.

Warren Buffett once stated that you should "never invest in a business you cannot understand." This is great advice, especially in an age where it is so easy for strangers to spruik stocks on investment forums, claiming that a particular company is going to change the world with its technology. It usually doesn't.

Be patient

A key to Warren Buffett's success has been patience. Not only does he wait patiently to buy stocks at fair prices, but he also then patiently holds onto them for the long term. Buffett isn't interested in trading stocks for Berkshire Hathaway (NYSE: BRK.A). This allows him to benefit from the power of compounding. A couple of famous Buffett quotes that encapsulate this perfectly are:

If you aren't willing to own a stock for 10 years, don't even think about owning it for 10 minutes.

Someone's sitting in the shade today because someone planted a tree a long time ago.

Building wealth with ASX shares

Let's imagine that you can generate an average 10% per annum return from the share market by following Buffett's approach (this is broadly in line with historical averages).

If you were able to invest $10,000 into the share market each year from your 40th birthday, by the time you are 65 you would have a portfolio valued at approximately $1.1 million.

Clearly, it is never too late to start investing.

In other sad news, Warren Buffett lost his partner at Berkshire Hathaway, Charlie Munger, earlier today. More on that here.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Berkshire Hathaway. The Motley Fool Australia has recommended Berkshire Hathaway. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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