Warren Buffett's Best Advice for Making Big Money with Small Sums
The Secret Advantage of Starting Small and Staying Sharp
A lot of people dream about making more money. They read they research, they hustle—but many miss one essential piece of advice from Warren Buffett and Charlie Munger.
“If you’re working with small sums of money, your advantage is huge.”
When Buffett started out, he wasn’t dealing with the billions he has today. He was just another guy with a little money and a lot of time. But he used that time to search for businesses selling at the lowest price relative to the cash they’d produce in the future.
Back in the 1950s and 1960s, Buffett made some of his best returns. We’re talking about an average of 50% per year. And how did he do it? By working with smaller amounts of money and finding ridiculously cheap stocks others ignored.
“If I were working with a small sum today, “I’d search for businesses selling at the lowest price relative to the discounted cash they’d produce in the future.”
That’s the secret. The smaller your pot of money, the bigger your universe of opportunities. You can invest in tiny, mispriced companies that are way off Wall Street’s radar. When you’re swimming with the sharks—managing millions or billions—the opportunities shrink.
But here's the kicker: you have to do the work.
Charlie Munger backs this up. He knows that you can find these opportunities if you’re smart and willing to put in the effort. Munger's advice?
“Look for unusual, mispriced opportunities in obscure stocks.”
The only people doing this successfully are willing to slog through the tough research without any help from fancy financial institutions or people throwing capital their way.
It’s a long game. And most people won’t play it because they want shortcuts. But the truth is, the smaller you start, the more freedom you have to think long-term, hunt for deals others can’t be bothered to see, and move fast when you find the right opportunity.
Why People with Small Money Win Big
Buffett doesn’t shy away from it—when he had tiny amounts of capital to work with, he could move faster and find better deals. Those days were his golden age of returns. And if you’re sitting on small amounts of money now, you’ve got an advantage over the big players in the market.
But as you scale, things change. Managing millions of dollars forces you to look for bigger opportunities. You have fewer options, fewer great deals, and a lot more competition.
That’s why Buffett’s telling you this now. If you’ve got a small bankroll, this is your time.
The Wrong Mindset Could Wreck You
But don’t get it twisted—just because you can win big with a small sum doesn’t mean you automatically will. People screw this up all the time.
I’ve seen it happen. A guy I knew had a great job, earned way more than many people, but couldn’t manage his money. He felt entitled to better pay just because he had more experience and put in long hours. But money doesn’t work like that.
The world doesn’t owe you a thing. You get paid for the value you create, not for how much time you’ve clocked in.
This applies to investing, too. If you’re not putting in the effort to understand what you’re investing in, why the stock is mispriced, or where the future value lies, you’ll end up broke—or worse, chasing bad opportunities.
Stop Trying to Play the Big Game Too Early
One of the most common mistakes I see is people trying to invest and manage their positions as if they’re running a billion-dollar fund, even though they only have $10k in the market. Moreover, other small investors aim for rapid success, avoiding the hard work of researching, analyzing financial statements, and grasping the true value of a business. Instead of laying a solid foundation, they rush the process, missing out on the insights that come from doing the necessary groundwork.
But here’s the truth: the grind is where the gold is.
Buffett and Munger didn’t start big. They didn’t have hedge funds full of analysts feeding them data. They worked solo, they read hundreds of annual reports, they thought critically about each move they made. And that’s what you’ve got to do if you want to make real money with a small sum.
Final Thought: This Won’t Be Easy
Making money isn’t easy, but being perpetually broke is 10x harder. Buffett’s path wasn’t quick or glamorous—it was filled with sleepless nights, endless research, and the discipline to say no to bad opportunities, no matter how tempting they looked.
If you’re working with a small sum today, take heart. You’re in the same position Warren Buffett was back when he was getting started. And his advice to you? Start small, work smart, and never settle for less than a business that’s ridiculously cheap. Stick with that mindset, and the returns will come.
Tell me in the comments which advice from Buffett or Munger resonates the most with you—and why