Warren Buffett is closely followed within the investment community. The multi-billionaire investor built one of the world’s greatest fortunes by simply investing in high-quality companies over the long term. And it’s a strategy that even those with modest capital can use to grow their wealth.

While starting an investing journey early can be extremely beneficial, Buffett’s method can still make a significant difference for older adults. After all, the billionaire actually earned more than 99% of his $143 billion fortune after he turned 50.

So how can investors leverage its strategy to improve their financial outlook? Let’s take a look.

Quality over quantity

One of the most common pieces of advice newbie investors hear is to diversify. On paper, it’s a pretty good idea. Diversification helps spread the risk of a portfolio so that if one company does not perform to expectations, the other positions in the portfolio can help offset the negative impact.

However, the pursuit of diversification can lead investors to settle for mediocre companies simply for the sake of diversification. And in the long run, this can harm portfolio performance.

Instead, investors should focus solely on finding the highest quality companies to own and gradually diversify their portfolios over time rather than rushing to gain exposure to certain industries or sectors.

Stay in a circle of competence

Buffett has missed many growth opportunities over the past two decades by avoiding the technology sector. While his investment company, Berkshire Hathawaynow occupies tech positions, most are just recent decisions, and not all of Buffett’s but rather his team’s.

This is because Buffett never invests in sectors or companies he doesn’t understand. And while this can lead to leaving a lot of money on the table, it also helps avoid falling into traps that lead to the destruction of wealth rather than its creation.

Pay a fair price

Just because a company is one of the best in the world doesn’t automatically mean it’s a good investment. Paying too much, even for a blue-chip stock, can lead to mediocre returns, lagging stock indexes like the FTSE100 Or S&P500.

Right away, Rolls-Royce (LSE: RR.) is comfortably among the most bought UK stocks, according to Hargreaves-Lansdown. It’s not difficult to understand why. After years of mismanagement and near-bankruptcy operations during the pandemic, Rolls-Royce shares have soared following new management that put the company back on track.

Increased travel volumes have increased demand for its aerospace maintenance services. At the same time, increasing geopolitical conflicts are proving to be a powerful tailwind for the defense sector. And its promising modular nuclear reactors could be a powerful growth catalyst for its energy segment over the next decade.

Yet stocks trading forward price/earnings ratio With a ratio of 64.5, it appears that much of this growth potential is already priced into the stock, suggesting that shares are actually quite expensive at the moment. In other words, this increasingly high quality company might still be a bad investment under Buffett’s investment method.