Forget Premium Bonds and gold! I’d follow Warren Buffett’s advice in 2021

first_imgForget Premium Bonds and gold! I’d follow Warren Buffett’s advice in 2021 Image source: Getty Images Enter Your Email Address Premium Bonds and gold both have their own individual attractive qualities. However, there’s one thing that links these assets which is discouraging me from buying. Instead, I’d much rather follow Warren Buffett’s tried and tested strategy he’s used to build wealth over the past six decades. Warren Buffett’s strategy Since he was a teenager, Warren Buffett has been an investor. He bought his first stock when he was in his mid-teens and, since then, he’s earned tens of billions of dollars investing in the stock market. 5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…During this time, he’s stayed away from speculative assets. These are broadly defined as assets that don’t produce their own cash flow.Gold and Bitcoin fit into these buckets. Premium Bonds technically do provide an income. But with the prize pot set at just 1%, and no guarantee of winning, I won’t be buying them for their income credentials. Instead of speculating on the price of different assets, Warren Buffett has acquired stocks and shares. He has concentrated his efforts on buying businesses with large profit margins and substantial competitive advantages. Companies with these qualities tend to earn the most sustainable profits over time. And profit equals cash flow. That’s the main reason why I’m following Warren Buffett and avoiding gold and Premium Bonds. I’m much more comfortable buying companies that produce profit and free cash flow.What’s more, most stocks and shares offer investors a regular dividend. The average UK market dividend yield is around 3% at present. That means I’ll be paid to hold equities. By comparison, it usually costs money to hold gold. Stocks to buy While assets like gold have earned enormous returns for investors over the past 12 months, the market’s top Warren Buffett-like stocks have been better investments in the long run.One example is the gaming company Games Workshop. Over the past decade, shares in this business have returned around 40% per annum. That suggests £1,000 invested in the stock a decade ago would be worth over £50k today. Investors may have been able to earn similar returns on some other assets, but there’s no guarantee this will continue. However, with a company like Games Workshop, which is making money from its customers every day, the chances of continued investment success, in the long run, are much higher. There are plenty of other examples of companies that have earned large returns for investors in the past. I believe these firms will continue to earn large profits. Companies such as Fevertree and Jet2 have been terrific investments in the past. As long as their competitive strengths remain, I think they’ll continue to earn high total returns for their shareholders as we advance. That’s why I think following Warren Buffett rather than buying Premium Bonds or gold could be the better strategy for long-term investment success.  Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. Rupert Hargreaves | Sunday, 17th January, 2021 See all posts by Rupert Hargreaves I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.center_img Rupert Hargreaves owns no share mentioned. The Motley Fool UK owns shares of Games Workshop. The Motley Fool UK has recommended Fevertree Drinks. 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. I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. 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