Warren Buffett: How to Generate 50% Returns with Small Amounts of Money (Recent Interview)

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Warren Buffett talks about how to invest small sums of money and generate 50% annual returns. Everything you have ever learned about money is wrong and you are about to find out why in this video. You see, there is an old saying that it “takes money to make money”. Meaning that if you want to generate attractive investment returns, you first have to be sitting on a large amount of money. As you are about to hear from Warren Buffett, this isn’t actually the case. In fact, when it comes to generating high investment returns, it can actually be a huge advantage to be starting out with relatively small sums of money. Take a listen to what Buffett had to say when asked how he would generate 50% returns if he was starting out again with a small amount of money.

There are 3 incredibly important principles from Warren Buffett that you absolutely must follow if you want to generate high returns with small amounts of money. We are going to jump into that list shortly, but first, some quick background on Warren Buffett to put his comments from the clip into context. Buffett is the CEO of Berkshire Hathaway, a conglomerate with a market value of a staggering 900 billion dollars as of the making of this video. When it comes to investing, bigger is not always better. As a portfolio, or business in the case of Berkshire, gets larger, so does the dollar amount of an investment that is able to truly “move the needle” as Buffett likes to put it. For the sake of argument, let’s say an investment needs to be 5% of the current value of Berkshire in order for it to be large enough to make a difference. 5% of 900 billion comes out to 45 billion dollars.

To put that 45 billion dollar number into perspective, take a look at some well known companies with market caps of around that size. There is the clothing brand, Adidas. Food company Kraft Heinz, owner of namesake brands Kraft and Heinz as well as Oscar Meyer, Kool Aid, Lunchables, and Jello. There’s also the car manufacturer Hyundai, a company that generated 121 billion dollars in revenue in 2023. All of these companies are massive, with their each and every move closely scrutinized by professional investors. Given how well followed these companies are, it is highly unlikely that their stocks will ever be extremely undervalued.