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Legendary investor Warren Buffett has generated substantial returns for the shareholders of his company, Berkshire Hathaway. From 1964 to 2023, Berkshire delivered an overall gain of 4,384,748% (1).<\/p>\n
Given that astonishing track record, one might assume that Buffett would want this successful trajectory to continue through his estate after his passing. However, the Oracle of Omaha has a different plan in mind.<\/p>\n
Top Picks <\/p>\n
In his 2013 letter to Berkshire shareholders, Buffett shed light on the directives he has included in his will.<\/p>\n
\u201cOne bequest provides that cash will be delivered to a trustee for my wife\u2019s benefit,\u201d he wrote (2). \u201cMy advice to the trustee could not be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund.\u201d And now, over 10 years later, the S&P 500 is continuing to weather storm after storm \u2014 including the war in Iran.<\/p>\n
While Buffett\u2019s strategy is straightforward and doesn’t require constant monitoring or active trading, Buffett expressed a significant amount of confidence in it.<\/p>\n
Here are a few ways you can take Buffett\u2019s advice and apply it to your own portfolio.<\/p>\n
Don\u2019t pick stocks, do this instead <\/p>\n
Buffett\u2019s preference for recommending index funds stems from his belief that stock picking is not an optimal strategy for average investors.<\/p>\n
At the 2021 shareholders meeting, he stated frankly, \u201cI do not think the average person can pick stocks (3).\u201d<\/p>\n
This is where index funds come into play. They can be a passive investment strategy accessible to everyone \u2014 even those without Buffett\u2019s wealth.<\/p>\n
In fact, even your digital nickels and dimes will suffice. There\u2019s a popular app called Acorns<\/a> that invests your spare change for you automatically.<\/p>\n All you need to do is sign up<\/a> and link your cards, which just takes a couple of minutes. Then it\u2019ll round up your recent purchases to the nearest dollar and invest the difference \u2014 your spare change \u2014 in a diversified portfolio.<\/p>\n This effortless strategy offers a practical and low-barrier entry into the world of investing.<\/p>\n With Acorns, you can invest in a dividend ETF with as little as $5. Even better, if you sign up today. with a reccuring monthly deposit, Acorns will add a $20 bonus<\/a> to help you begin your investment journey.<\/p>\n It\u2019s worth noting the S&P 500, Buffett’s preferred index fund for low-cost investing, surged 24% in 2023. By investing in an S&P 500 index fund, investors get exposure to 500 large companies across various industries.<\/p>\n Read More: Non-millionaires can now hoard property like the 1% \u2014 how to start with as little as $100<\/a><\/p>\n The last 10%? <\/p>\n Remember, Buffett didn\u2019t advise going all-in on the S&P 500. He also recommended allocating 10% of the cash to short-term government bonds.<\/p>\n Investing in short-term government bonds can be appealing for those seeking lower-risk investments or a stable, relatively predictable source of income. Furthermore, these bonds are more liquid than long-term bonds, making it easier for investors to access their funds without significant penalties or loss in value.<\/p>\n The optimal allocation hinges on one’s personal financial situation and the current stage of their investment journey.<\/p>\n But bonds and safe bets are only one part of the typical 60\/40 portfolio split. Investing in companies directly rather than an index is, for many, a natural part of growing your wealth \u2014 and cultivating your nest egg.<\/p>\n SoFi\u2019s easy-to-use DIY investing platform lets you buy stocks, ETFs<\/a> and more with no commission fees and no account minimums.<\/p>\n The platform is designed for both beginners and seasoned investors, with real-time investing news, curated content and the data you need to make smart decisions about the stocks that matter most to you.<\/p>\n Plus for a limited time you can get up to $1,000 in stock<\/a> when you fund a new account.Always have a plan<\/p>\n Ultimately, everyone\u2019s financial situation is unique, characterized by different obligations, goals and risk tolerance.<\/p>\n While the dream of growing our savings alongside the S&P 500 is common, many Americans also face other financial responsibilities such as mortgages and student loans.<\/p>\n Ensuring you have enough money to meet current financial obligations and invest for the future can be a difficult task to tackle on your own.<\/p>\n If you want to ensure you\u2019re maximizing your money, it could pay to speak to a qualified financial advisor.<\/p>\n Research from Vanguard shows that working with a financial advisor can add about 3% to net returns over time. That difference can become substantial. For example, if you started with a $50,000 portfolio, professional guidance could mean more than $1.3 million in additional growth over 30 years, depending on market conditions and your investment strategy.<\/p>\n If you have a portfolio of $250,000 or more, platforms like WiserAdvisor<\/a> can connect you with vetted professionals who specialize in this kind of planning.<\/p>\n Simply answer a few questions about your savings, retirement timeline and overall investment portfolio.<\/p>\n From there, WiserAdvisor reviews its network to match you \u2014 for free \u2014 with up to three vetted, reputable advisors aligned with your specific needs.<\/p>\n You can then schedule no-obligation consultations<\/a> with your matches to determine who is the best fit for your long-term goals.<\/p>\n WiserAdvisor is a matching service and does not provide financial advice directly. All matched advisors are third parties, and specific financial results are not guaranteed.<\/p>\n You May Also Like <\/p>\n Join 250,000+ readers and get Moneywise\u2019s best stories and exclusive interviews first \u2014 clear insights curated and delivered weekly. Subscribe now.<\/a><\/p>\n Article Sources <\/p>\n We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines<\/a>.<\/p>\n Berkshire Hathaway (1<\/a>), (2<\/a>); CNBC (3<\/a>)<\/p>\n This article provides information only and should not be construed as advice. It is provided without warranty of any kind.<\/p>\n","protected":false},"excerpt":{"rendered":"Moneywise and Yahoo Finance LLC may earn commission or revenue through links in the content below. 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