Are you looking for the secret to wealth accumulation? If you are, then look no further than legendary investor, Warren Buffett.

Over many decades, the Berkshire Hathaway (NYSE: BRK.B) leader has amassed a US$100+ billion fortune through his simple investment strategies and disciplined approach to the share market.

In light of this, by following some of the Oracle of Omaha’s timeless advice, you could also become rich in the future.

Buffett’s advice

Firstly, when it comes to investing, Buffett advises that you “never invest in a business you cannot understand.”

Sure, it could be exciting investing in some hot new tech company promising to change the world, but very few will actually achieve their aspirations.

Unless you know the business model and competitive landscape thoroughly, this is just the same as gambling. The likely outcome is that you will lose your money by speculating on these types of ASX shares. So, stick to what you understand, as this will help you make informed investment decisions.

Competitive advantages

Another key to Buffett’s success has been his focus on companies with sustainable competitive advantages and fair valuations. In his 1995 letter to shareholders, he quipped:

In business, I look for economic castles protected by unbreachable moats.

But it is also important to understand what is driving that moat and how sustainable it is before committing to an investment. He adds:

We are trying to figure out what is keeping — why is that castle still standing? And what’s going to keep it standing or cause it not to be standing five, 10, 20 years from now. What are the key factors? And how permanent are they? How much do they depend on the genius of the lord in the castle?

If that sort of research sounds too time-consuming, don’t worry. That’s because there’s an ETF that has been set up to replicate Buffett’s investment style – Vaneck Morningstar Wide Moat ETF (ASX: MOAT).

Think long term

Finally, unless you win the lottery, wealth isn’t generated overnight. It will take time and discipline to become rich with ASX shares.

Buffett’s approach to investing is heavily focused on the long-term. He believes that investors should buy shares with the intention of holding them for decades, not just for a few months or years. This mindset allows investors to ride out market fluctuations and benefit from the power of compounding. He once said:

Our favourite holding period is forever.

It certainly could pay (literally) to listen to Warren Buffett’s advice on this. For example, ASX shares have generated an average total return of 9.6% per annum over the last 30 years.

This means that if you had invested $500 a month or $6,000 a year into ASX shares during this time and earned the market return, you would have grown your portfolio to $1 million. And if you doubled your investment to $1,000 a month or $12,000 a year, the value of your portfolio would also have doubled to $2 million.

And while we can’t say what will happen in the future, these returns are in line with historical averages. So, it wouldn’t be unreasonable to hope for similar over the next 30 years.

A final word

Let’s close this out now with another key piece of advice from the Oracle of Omaha in relation to not being put off by the inevitable bad investment that happens from time to time. He said:

The weeds wither away in significance as the flowers bloom. Over time, it takes just a few winners to work wonders.

The post How to get rich by following Warren Buffett’s advice appeared first on The Motley Fool Australia.

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More reading

• Which stocks does Warren Buffett own (and what can ASX 200 investors learn from this)?
• 3 ETFs that could be top buys right now
• Forget term deposits and listen to Warren Buffett’s advice
• 3 ASX ETFs I’d buy and hold for 10 years
• Need passive income? Turn $6,000 into $100 every month

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 and VanEck Morningstar Wide Moat ETF. 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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