The 3 investing rules used by Warren Buffett to turn $10K into billions — that still work in 2026

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Warren Buffett built one of the world's largest fortunes by investing in businesses he understood, buying at attractive prices and giving those investments plenty of time to grow.

But what would the legendary investor do if he had to start over with just $10,000?

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Buffett addressed that question during Berkshire Hathaway's 1999 annual shareholder meeting, when an investor asked him bluntly how they could make $30 billion dollars (1).

His answer offered a window into the principles behind his investing philosophy.

"If I were getting out of school today and I had $10,000 to invest … I probably would focus on smaller companies … You have to buy businesses, or little pieces of businesses called stocks, and you have to buy them at attractive prices, and you have to buy into good businesses."

More than 25 years later, those principles can still offer a useful framework for investors who are starting with considerably less than Buffett has today.

Here are three of his fundamental rules to consider.

Rule 1: Understand your circle of competency

Tom Watson Sr., the founder of IBM, once said, "I'm no genius. I'm smart in spots — but I stay around those spots (2)." It's a philosophy Buffett has applied to investing throughout his career.

Rather than chasing every new opportunity, Buffett has generally focused on businesses and industries he understands well enough to judge their long-term prospects.

But understanding an investment doesn't eliminate risk. At Berkshire Hathaway's 2020 annual shareholder meeting, for instance, Buffett warned that investors also need the conviction to withstand major swings in the market.

"You've got to be prepared, when you buy a stock, to have it go down 50% — or more — and be comfortable with it, as long as you're comfortable with the holding," he said (3).

Knowing your circle of competency can also mean recognizing how involved you actually want to be in managing your investments.