Warren Buffett Reveals His Best Investment Tip For High Inflation — And It's Not What You Think

Berkshire Hathaway chair Warren Buffett has a net worth of £123.96 billion ($165.4 billion), according to Forbes. His net worth received a boost in the recent tariff-induced market crash when most hedge funds and asset managers reshuffled their portfolios to narrow losses.

Market volatility and sticky inflation have made it tough for investors to safely navigate the complex macroeconomic landscape. Market experts believe the US government's evolving policies and drastic changes within the federal system have significantly increased the chances of a recession.

At the 2022 Berkshire Hathaway annual shareholders meeting, Buffett offered insights into how investing in knowledge and self-betterment makes you yourself an asset, enabling you to access valuable opportunities with ease for wealth growth.

'Whatever abilities you have can't be taken away from you. They can't be inflated away from you,' he had said. 'The best investment by far is anything that develops yourself, and it's not taxed at all.'

Real Estate to Hedge Inflation, Defer Taxes

When it comes to tangible assets, Buffett believes real estate is a 'good investment' during times of inflation.

'They're the businesses that you buy once, and then you don't have to keep making capital investments subsequently. So, you do not face the problem of continuous reinvestments involving greater and greater dollars because of inflation,' the Oracle of Omaha had said in the 2015 Berkshire Hathaway shareholders meeting.

Furthermore, real estate investors can completely defer taxes on real estate transactions by leveraging 1031 exchanges. The rule allows you to defer capital gains tax on the sale of an investment property by reinvesting the proceeds into another like-kind property. This rule can save you a significant amount of money because the proceeds from selling a property within one year of owning it are treated as ordinary income, which can increase your tax rates to up to 37%. Meanwhile, long-term capital gains tax rates for properties can be up to 20% based on your income tax bracket.

Stocks: Only if You Are Prepared to Face Market Upheavals

Buffett has navigated the worst recessions, double-digit inflation rates, and extreme volatility in the past half-century and has still managed to create enormous wealth over the decades.

He abides by his investment philosophy of buying great businesses at low prices and holding those investments for the long term.

While ensuring he invests in high-quality businesses with robust fundamentals, Buffett also looks for efficiency, strength, negotiating power, and the management's vision. This strategy has helped his portfolio thrive during inflationary environments. He also understands that stocks are subject to wide-ranging market forces.

The ongoing market slump has led many people to make financial decisions in haste, like tapping into their 401(k) accounts or trading stocks during volatile sessions. Experts believe these actions can derail portfolios, wipe out years of savings, and negatively impact financial goals over the long run.

'You've got to be prepared when you buy a stock to have it go down 50% or more, and be comfortable with it... but some people are not really careful. Some people are more subject to fear than others,' Buffett had said.

Disclaimer: Our digital media content is for informational purposes only and not investment advice. Please conduct your own analysis or seek professional advice before investing. Remember, investments are subject to market risks and past performance doesn't indicate future returns.