Pinocchio

Warren Buffett, the Oracle of Omaha, is pretty much a one-man investing machine. If you're going to follow anyone's example of how to invest, it should be his. But with shares of Berkshire Hathaway trading at over $200,000 each, you can't exactly hitch your star to his wagon. So how do you invest like Buffett in a way that makes sense for your budget, circumstances and family? Lend us your ear.

Of course, picking stocks is how Buffett made his fortune, but it's not going to work for you. "If you're not an expert at picking stocks, you have no business picking stocks," says Maz Jadallah, founder and CEO of AlphaClone, a company that uses technology to help people invest wisely. He advises people who aren't experts at picking stocks to throw their money into the S&P 500 (^GSPC) with a 10 percent cash cushion and leave it. "It's so simple it takes your breath away, and that's why it appeals to so many people." It might not be as sexy as day trading, but it's probably what Buffett himself would tell you to do. In fact, it's what's going to happen to his money after he dies.

View all Courses "If you want to be a passive mutual fund investor, index funds are the place to be," says Steve Wallman, CEO of Folio Investing. "They offer low fees and are reasonably diversified. You're not going to knock it out of the park, but the S&P isn't going to drop to zero like Enron stock."

Still, Wallman admits that there are people who both want a higher return and want to be more engaged. Ultimately, what you can do depends on several factors, including your current income, projected income and responsibilities. Wallman notes the world of difference between a family where two people are working and earning a decent wage with no kids against the same income level with three kids and aging parents to support. In the former case, there's more risk tolerance. In the latter, there's less. "Should you be doing a little bit more or even a little less with your money?" he asks. "It depends on your circumstances." Still, no matter what you decide, Wallman thinks you should have an index fund as part of your investment strategy.