Have you hit the half-century mark while still waiting for a reliable passive income to bolster your lifestyle or your retirement nest egg?
You're far from alone.
But with the cost of living now outpacing wage rises for most of us, garnering that passive income has become more important than ever.
Fortunately, Aussie investors are in a good position to invest for a second income, with many leading S&P/ASX 200 Index (ASX: XJO) stocks paying fully franked dividends.
Of course, first we need to build our wealth and invest accordingly.
With that in mind, we turn to legendary investor, Warren Buffett, for some valuable tips on building wealth.
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Warren Buffett's investing wisdom has netted him billions
At last count, the 93-year-old CEO of Berkshire Hathaway was worth a cool US$112.9 billion (AU$178.1 billion), according to Forbes. A feat that's all the more impressive considering he began his investing journey with almost nothing.
The passive income Buffett earns on the interest from his cash holdings alone would be life-changing for most Aussies.
But it's stocks that earned him his fortune.
How?
Well, first, Warren Buffett preaches patience. The investment market isn't a casino. And you won't earn a solid passive income overnight.
"Embrace what's boring, think long-term, and ignore the ups and downs," the Oracle of Omaha says.
Or perhaps more to the point, "Our favourite holding period is forever."
That's particularly good advice in volatile markets, like we've seen on the ASX 200 and indeed across the world recently.
Trying to time the ups and downs is a mugs game. Almost no one gets that right with any consistency.
On the other hand, quality companies with good management, high barriers to entry, and with growth opportunities historically have tended to reward shareholders over the long term.
It's no coincidence that Berkshire Hathaway's top holdings include Apple Inc (NASDAQ: AAPL), Bank of America Corp (NYSE: BAC) and Coca-Cola Co (NYSE: KO).
Keep your passive income stock investments simple
Here's another great Warren Buffett nugget to keep in mind as you work to build a passive income portfolio:
Investing is not a game where the guy with the 160 IQ beats the guy with the 130 IQ. Once you have ordinary intelligence, what you need is the temperament to control the urges that get other people into trouble in investing.
Another time Buffett encapsulated that idea in a simple sentence. "It's easier to be smart one time than do it over and over again," he said.
Indeed, if you look at the top holdings of Berkshire again, you won't see any speculative stocks. And you won't find any crypto-related holdings. Or indeed, anything Buffett can't wrap his head around.
That's something all Aussie investors should keep in mind. If you don't understand what a company is about and how it's going to consistently earn a profit over the years, it's likely best to steer clear.
Look for bargains not the bottom for passive income stocks
With the ASX 200 down 10% from its 3 February peak, there are plenty of quality passive income stocks out there trading at a bargain.
A common mistake many investors will make after this kind of retrace is to wait for these stocks to fall further, hoping to buy in at the bottom.
Not only can this see you miss the bargain opportunity, as the stock may well turn around and begin marching higher again. But it also can lead to buying moderate companies at a really reduced price rather than top-notch passive income stocks for a decent bargain.
As Warren Buffett says, "It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price."
