Warren Buffet's Advice on Investing in a Low-Cost S&P 500 Index Fund.....

Euro_Skank

Hi,

Following on from Mr. Buffet's instructions to his family in the event of his passing, I wish to make regular investments (possibly as part of a S&S ISA) in the above, perhaps using Vanguard Funds plc S&P 500.

Who would be the best organisation to use for a regular monthly S&S ISA investment? £20,000 / 12 = £1,666.66p per month.

Also, is there a German equivalent of this fund?

pinkllama

He said that as an American investor. An American investing only in US equities removes currency risk from their portfolio. As the US market is approximately 53% of world equity, Americans can invest solely in their own market and still be diversified.
If you are not American, you should probably be looking at an All-World index fund.

Just my opinion of course

ChesterDog

He also said it with a view to preserving an enormous amount of already accumulated capital while achieving additional growth.

dunstonh

Following on from Mr. Buffet's instructions to his family in the event of his passing

There was no instruction. It was an opinion given in a meeting with US investors suffering US taxation in the US market looking with no currency fluctuation in mind. US investors are traditionally very inward looking and US taxation is different (such as taxing funds internally whereas in the UK it is externally.

It should be noted that he himself does not follow that.

A_T

Vanguard's mixed asset funds for US customers (their equivalent to the UK Lifestrategy and Target Retirement Funds) go for an equity split of 2/3 US equities (entire US market not just S+P 500), 1/3 International (no US).

The FTSE All World Index puts the US share at 51% so Vanguard US show a bias towards home markets but not to the extent Mr Buffet recommends.

bostonerimus

A_T wrote: »

Vanguard's mixed asset funds for US customers (their equivalent to the UK Lifestrategy and Target Retirement Funds) go for an equity split of 2/3 US equities (entire US market not just S+P 500), 1/3 International (no US).

The FTSE All World Index puts the US share at 51% so Vanguard US show a bias towards home markets but not to the extent Mr Buffet recommends.

Yep, I'm in the US and have 20% international equities and US Vanguard keeps suggesting I go to between 30% and 50% foreign stocks and add some foreign bonds to my portfolio too.

bostonerimus

dunstonh wrote: »

There was no instruction. It was an opinion given in a meeting with US investors suffering US taxation in the US market looking with no currency fluctuation in mind. US investors are traditionally very inward looking and US taxation is different (such as taxing funds internally whereas in the UK it is externally.

It should be noted that he himself does not follow that.

In both the US and the UK most regular people invest in tax advantaged accounts often for retirement and they are taxed similarly. There differences in taxation of dividends and capital gains only become apparent when you are investing in regular taxable accounts in either the US or the UK.

Euro_Skank

Thanks, all. Goes to show what I know - jack all!

So, next question please:

What low-cost index tracking fund can anyone recommend for the best return and which broker should I use? I'm 46 and plan to invest the max. S&S ISA amount until I retire when I'm 70.

A_T

Euro_Skank wrote: »

Thanks, all. Goes to show what I know - jack all!

So, next question please:

What low-cost index tracking fund can anyone recommend for the best return and which broker should I use? I'm 46 and plan to invest the max. S&S ISA amount until I retire when I'm 70.

Search the forums here for Snowman's spreadsheet it's an excellent tool for comparing platforms.

For funds I'm currently favouring these 2:

Legal & General International Index Trust - OCF 0.13% (tracks the performance of the FTSE World (ex UK) Index)

HSBC FTSE All Share Index - OCF 0.07%

ColdIron

Euro_Skank wrote: »

I'm 46 and plan to invest the max. S&S ISA amount until I retire when I'm 70.

Have you already dismissed a SIPP or other pension for retirement?

Glen_Clark

dunstonh wrote: »

It should be noted that he himself does not follow that.

No because he is Warren Buffet.
If you are as smart as him and employ as many analysts you should invest like he does too
Incidentaly, if you are goung to invest in $ denominated funds you might consider that dividends will be paid in $ which incurrs a fee to convert to sterling and another fee to reinvest. So you may be better with an accumulator than the Vanguard fund.