No savings in 2024? I'd follow Warren Buffett and start building wealth

Don't let having no savings hold you back from becoming wealthy.

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Legendary share market investing expert and owner of Berkshire Hathaway Warren Buffett

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If you don't have any savings, but want to be wealthy, then read on.

That's because I'm going to explain how with ASX shares you could build significant wealth by following the lead of Warren Buffett.

Over many decades at the helm of Berkshire Hathaway (NYSE: BRK.B), the Oracle of Omaha has demonstrated that wealth can be created through very simple investment principles. And the good news for us all is that by applying his time-tested methods with ASX shares, we could also pave our way to financial freedom.

Investing like Warren Buffett with ASX shares

A great starting point is to make consistent investments in ASX shares with a long-term perspective.

For example, if you could invest $500 each month into the share market, then thanks to the power of compounding, you could build a sizeable investment portfolio by following Warren Buffett's investment approach.

Buffett likes to focus on investing in established companies with sustainable competitive advantages, strong business models, positive long-term growth outlooks, and fair valuations.

Investing in companies that exhibit these qualities has allowed the Berkshire Hathaway leader to deliver an average annual return of 19.8% since 1965. This is double the market return over the same period. Clearly his methods work, you can't fluke your way through almost 60 years of investing.

Compounding your way to wealth

As I mentioned above, the key is to make consistent investments to benefit from compounding. This is where you earn returns on top of your returns.

Let's imagine you can achieve a return in line with the market average since 1965, 9.9% per annum, if you were to invest $500 into ASX shares, you would have grown your portfolio to be worth approximately $360,000 in 20 years.

But why stop there? If you keep going, you will see just how powerful compounding is the longer you leave it.

For example, just five more years of the same, and that $360,000 would become approximately $610,000. That's not a typo. An extra quarter of a million in just five years.

And you keep going another five years, your portfolio would be worth over $1 million, all else equal.

The above is based on the market return. If you can better this by following Buffett's tenets, your portfolio could become even greater.

Overall, I believe this shows that by following Warren Buffett's investment style with ASX shares, you can build significant wealth even if you have no savings today.

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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