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Want to make a million? I’d follow Warren Buffett to find the best UK shares to buy now

Peter Stephens
·3-min read
close-up photo of investor Warren Buffett
close-up photo of investor Warren Buffett

Identifying the best UK shares to buy now is clearly a very subjective task. Some investors may feel defensive companies are the most attractive option, given the uncertain outlook for the economy. By contrast, other investors could decide to focus on growth stocks in a fast-changing world economy.

Warren Buffett has a long track record of identifying sound companies and purchasing them at opportune moments. Following the billionaire investor’s lead could produce higher returns in the long run that increase an investor’s chances of making a million.

Finding the best UK shares by listening to Warren Buffett

Fortunately for investors seeking the best UK shares to buy now, Buffett has always been open about what he looks for when investing money in stocks. For example, he aims to buy companies with a dominant market position. That means they can be leveraged to produce higher profitability over the long run.

For example, a business may be a dominant brand within its industry. This may lead to a more loyal customer base that’s less likely to trade down to cheaper alternatives during present economic challenges. It may also allow the company in question to more easily generate higher margins. And also expand into new product areas over the coming years.

Industries with established growth opportunities

The best UK shares to buy now could be those companies that are well-established in industries that have long histories of strong growth. For Buffett, investing in technology companies has never been a central focus. This has meant missing out on several growth opportunities. But it has also allowed him to avoid potential pitfalls in sectors that fail to deliver on their potential.

Although many tech stocks may be popular at the present time, their valuations could be void of margins of safety in many instances. Buffett has also always sought to purchase high-quality businesses at low prices to maximise capital returns and limit risks. So a similar strategy could prove useful in today’s stock market. Therefore, the best shares to buy now could be those companies that face uncertain near-term outlooks within industries that have solid track records of growth.

Making a million from UK stocks

The recent stock market rally may mean investors are less interested in finding the best UK shares to buy now. For example, they may simply seek to purchase a basket of stocks, rather than follow Buffett’s lead in terms of being selective about their holdings.

This strategy could produce a £1m portfolio in the long run. For example, a £100,000 investment today could be worth in excess of £1m by equalling the stock market’s historic 8% annual total returns over a 30-year time period.

However, through finding the best UK shares to buy now, an investor could follow in Buffett’s footsteps and outperform the stock market. This may reduce the amount of time it takes to make a million through increasing potential rewards and reducing overall risks.

The post Want to make a million? I’d follow Warren Buffett to find the best UK shares to buy now appeared first on The Motley Fool UK.

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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.

Motley Fool UK 2021