Warren Buffett said 90% of his wife’s inheritance will be invested in one investment. Here’s why and how you can do it again

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Warren Buffett said 90% of his wife’s inheritance will be invested in one investment. Here’s why and how you can do it again

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Legendary investor Warren Buffett made a huge profit for the shareholders of his company, Berkshire Hathaway. From 1964 to 2023, Berkshire delivered a total profit of 4,384,748% (1).

Given that impressive track record, one might think that Buffett would want this successful approach to continue his legacy after his passing. However, the Oracle of Omaha has a different plan in mind.

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In his 2013 letter to Berkshire shareholders, Buffett shed light on the directives he included in his will.

“One will provides that the money will be delivered to the trustee for the benefit of my wife,” he wrote (2). “My advice to the trustee couldn’t be simpler: Put 10% of the money in short-term government bonds and 90% in the cheapest S&P 500 index fund.” And now, more than 10 years later, the S&P 500 continues to face storm after storm — including the Iran war.

Although Buffett’s strategy is straightforward and does not require constant monitoring or active trading, Buffett expressed a significant amount of confidence in it.

Here are a few ways you can take Buffett’s advice and apply it to your portfolio.

Don’t pick stocks, do this instead

Buffett’s penchant for recommending index funds stems from his belief that stock picking is not the right strategy for the average investor.

At the 2021 shareholders meeting, he said bluntly, “I don’t think the average person can choose stocks (3).”

This is where index funds come into play. It can be a no-nonsense investment strategy that is accessible to everyone – even those without Buffett’s wealth.

In fact, even digital nickels and dimes will suffice. There is a popular app called Acorns that automatically invests your spare change.

All you need to do is register and link your cards, which only takes a few minutes. It will then round up your recent purchases to the nearest dollar and invest the difference – your spare change – in a diversified portfolio.

This simple strategy provides an effective and low-barrier entry into the world of investing.

With Acorns, you can invest in a dividend ETF for as little as $5. Even better, if you sign up today. with a recurring monthly deposit, Acorns will add a $20 bonus to help you start your investment journey.

It’s worth noting that the S&P 500, Buffett’s preferred index fund for low-cost investments, is up 24% in 2023. By investing in an S&P 500 index fund, investors gain exposure to the largest 500 companies across a variety of industries.

Read More: Non-millionaires can now collect as much as 1% – how to start with as little as $100

The last 10%?

Remember, Buffett didn’t recommend investing in the S&P 500. He also recommended a 10% allocation to short-term government bonds.

Investing in short-term government bonds may be attractive to those looking for a low-risk investment or a steady, predictable source of income. In addition, these bonds are more liquid than long-term bonds, making it easier for investors to access their funds without major penalties or loss of value.

The right allocation depends on the individual’s financial situation and the current stage of their investment journey.

But bonds and safe bets are only one part of the typical 60/40 portfolio split. Investing directly in indexed companies is, for many, a natural part of growing your wealth – and cultivating your nest egg.

SoFi’s easy-to-use DIY investment platform lets you buy stocks, ETFs and more with no commission fees and no account minimums.

The platform is designed for both beginners and seasoned investors, with real-time investment news, curated content and the data you need to make smart decisions about the stocks that matter most to you.

And for a limited time you can get up to $1,000 in stock when you fund a new account. Always have a plan

Ultimately, everyone’s financial situation is different, characterized by different obligations, goals and risk tolerance.

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.

Making sure you have enough money to meet current financial obligations and invest in the future can be a difficult task to handle on your own.

If you want to make sure you’re maximizing your income, it can pay to talk to a qualified financial advisor.

Research from Vanguard shows that working with a financial advisor can add about 3% to total profits over time. That difference can be huge. For example, if you started with a $50,000 portfolio, an expert’s guidance could mean more than $1.3 million in additional growth over 30 years, depending on market conditions and your investment strategy.

If you have a portfolio of $250,000 or more, platforms like WiserAdvisor can connect you with vetted professionals who specialize in this type of planning.

Simply answer a few questions about your savings, retirement timeline and overall investment portfolio.

From there, WiserAdvisor updates its network to match you – for free – with up to three vetted, reputable advisors who match your specific needs.

You can then schedule a no-obligation consultation with your matches to decide who is the best fit for your long-term goals.

WiserAdvisor is a virtual service and does not directly provide financial advice. All similar advisors are third parties, and specific financial results are not guaranteed.