Warren Buffett's advice for his wife

racing_blue

Plenty of support for 2 or 3 fund passive portfolios over on Bogleheads. I'd love to have the chutzpah to go 50% total stock market, 50% total bond market, annually rebalanced.

Glen_Clark

So what would be better advice for WB's wife ?
Bearing in mind that for anything more complicated than what WB suggested, she would probably need to involve a 'financial advisor?'
As someone else put it,
she might as well ask a crocodile where is the best place to swim :rotfl:

talexuser

If you had as much money as Buffets wife (in the US) to invest it's probably great advice. If you don't then it probably isn't.

planteria

i have read WB's answers to questions re. this in the past. he uses his wife as an example of how he would advise the non-investor to invest.
it raises an interesting idea.
i would try to choose managed funds with good long-term track records instead.

Glen_Clark

planteria wrote: »

i would try to choose managed funds with good long-term track records instead.

past performance etc. Isn't that a recipe for buying at the top of the maerket?

planteria

i see what you mean.. but i was thinking more 'long term track record' that would have, as best as possible, ridden the market up & down

atush

redux wrote: »

The first and simplest conclusion of what Buffett says is that we might assume he thinks his wife doesn't want to spend as much time attending to investments as he has.

Yet he wants her to do it herself, and not fall victim to the sharks circling her after he goes?

coastline

I've managed to get the chart to go back to Feb 1988 which shows interesting results...SP 500...FTSE All Share...MSCI World Index.

http://www.trustnet.com/Tools/Charting.aspx?typeCode=NSP500,NASX,NM990100

planteria

so the S&P 500 is the winningest index:dance:

jamesd

bigfreddiel wrote: »

Warren Buffett said: “My advice to the trustee [for my wife] could not be more simple: Put 10 percent of the cash in short-term government bonds and 90 percent in very low-cost S&P 500 index fund.”

I like the simplicity of this, so, is it true?

It's true that he said it.

It's also true that Bill Bengen (the person behind the 4% rule) observed that adding a portion of small cap stocks to a 50:50 mixture increased the safe income withdrawal rate from 4% to 4.5% of the pension pot size each year. (top video here, relevant portion at 04:25)

That doesn't matter when you start with more capital than you can credibly spend but it does for the rest of us.

You have to be simple if you know nothing about money and aren't interested in learning but simple is not necessarily going to produce the best results. As with most fields of human activity putting in more work can lead to improved results.

If all you're willing to do is put in the time to do what he mentioned, go for it because it beats doing nothing. If instead you prioritise things like earliest retirement or higher income you might instead spend more time on the task.