How to invest like Warren Buffett with ASX shares in 2025

Warren Buffett is widely regarded as one of the greatest investors of all time. Over the past six decades, the Oracle of Omaha has built Berkshire Hathaway (NYSE: BRK.A) into a trillion-dollar empire through his disciplined, long-term approach to investing.

While Buffett primarily invests in US stocks, Aussie investors can apply his principles to ASX shares to build long-term wealth.

The key to his strategy is patience, buying great businesses at reasonable prices, and letting compounding do the work for you. As Buffett once said:

Someone is sitting in the shade today because someone planted a tree a long time ago.

Focus on quality

Buffett's investment philosophy revolves around buying great companies with strong competitive advantages. He looks for businesses with durable economic moats—things like strong brands, cost advantages, or high switching costs that keep competitors at bay.

On the ASX, companies like ResMed Inc. (ASX: RMD) and Cochlear Ltd (ASX: COH) fit the Buffett mould. These healthcare giants dominate their industries, benefit from high barriers to entry, and generate strong returns on equity. Investing in businesses with these qualities and holding them for the long run could lead to significant wealth generation.

Buy at fair prices

Warren Buffett is famous for saying:

It is far better to buy a wonderful company at a fair price than a fair company at a wonderful price.

While he avoids overpaying for stocks, he doesn't necessarily wait for companies to become cheap. Just buying wonderful companies at a fair price is sufficient. After all, wonderful companies seldom trade cheaply.

But that doesn't mean they never do. During market selloffs, many high-quality stocks trade at discounts and Buffett is known to take advantage. He once quipped:

Be fearful when others are greedy and greedy when others are fearful.

Think long term and avoid short-term noise

One of Buffett's most important rules is to ignore short-term market fluctuations. He stated:

The stock market is a device to transfer money from the impatient to the patient.

Instead of trying to time the market, Buffett focuses on long-term business fundamentals. Aussie investors should adopt the same mindset when investing in ASX 200 shares.

Companies like TechnologyOne Ltd (ASX: TNE) and Goodman Group (ASX: GMG) have strong long-term growth potential, even if their share prices experience volatility in the short term. Holding quality stocks for years—even decades—allows the power of compounding to work its magic.

Reinvest dividends and unleash compounding

Buffett famously doesn't pay dividends at Berkshire Hathaway because he prefers to reinvest profits into growth opportunities. However, he loves investing in companies that generate strong cash flows and consistently reward shareholders through dividends.

ASX investors can take a similar approach by reinvesting dividends from top dividend payers like Accent Group (ASX: AX1), Dicker Data Ltd (ASX: DDR), and Telstra Group Ltd (ASX: TLS) to accelerate wealth creation. Over time, this can lead to a snowball effect, with dividends compounding into a significant passive income stream.

Foolish takeaway

Warren Buffett's investment approach is simple but powerful: buy wonderful businesses, hold them for the long term, and let compounding work its magic.

By applying these principles to ASX shares, Aussie investors can steadily grow their wealth and build a portfolio that stands the test of time.

The post How to invest like Warren Buffett with ASX shares in 2025 appeared first on The Motley Fool Australia.

Motley Fool contributor James Mickleboro has positions in Accent Group, Cochlear, Goodman Group, ResMed, and Technology One. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Berkshire Hathaway, Cochlear, Goodman Group, ResMed, and Technology One. The Motley Fool Australia has positions in and has recommended Dicker Data, ResMed, and Telstra Group. The Motley Fool Australia has recommended Accent Group, Berkshire Hathaway, Cochlear, Goodman Group, and Technology One. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2025