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

dividendhero

bigadaj wrote: »

Probably, can't recall him ever saying put the majority if your wealth into gold though.

Buffet has produced a number of anti-gold quotes, but this is my favourite..

I will say this about gold. If you took all the gold in the world, it would roughly make a cube 67 feet on a side…Now for that same cube of gold, it would be worth at today's market prices about $7 trillion – that's probably about a third of the value of all the stocks in the United States…For $7 trillion…you could have all the farmland in the United States, you could have about seven Exxon Mobils (NYSE:XOM) and you could have a trillion dollars of walking-around money…And if you offered me the choice of looking at some 67 foot cube of gold and looking at it all day, and you know me touching it and fondling it occasionally…Call me crazy, but I'll take the farmland and the Exxon Mobils.

DiggerUK

"Finally, here's Buffett's bottom line: When trillions of dollars are managed by Wall Streeters charging high fees, it will usually be the managers who reap outsized profits, not the clients. Both large and small investors should stick with low-cost index funds."

How do you best heed Buffett's advice? In your retirement and investment vehicles, buy the lowest-cost index funds representing the major stocks and bonds throughout the world. You can do this with two funds -- then leave them alone."
https://www.forbes.com/sites/johnwasik/2017/03/01/warren-buffets-single-best-piece-of-advice/#5ba1d52441b9

http://www.warrenbuffett.com/warren-buffetts-7-most-popular-quotes-about-gold/
..._

Peter314

dividendhero wrote: »

You need a fair chunk of money to do this (around £600k). But if you put £300k into each of an income and accumulator tracker you'll get about 11k from the income fund and if you sell around 3.7% of the accumulator each year you'll benefit from two sets of tax allowances and get around £22,000 pa tax free. This is of course on top of any ISA's

An acc fund won't result in only capital gains, because the reinvested income is taxable. An investment that doesn't pay dividends but generates only capital growth should benefit fully from cgt allowances though.

https://www.youinvest.co.uk/articles/sharesmagazine/89901/income-versus-accumulation-units

Income rolled up into your accumulation units is known as a “notional distribution” and is taxable in exactly the same way as the distributions from income units. Any dividends that are automatically reinvested can be used against your £5,000 dividend income tax-free allowance, which means that if total dividends received/reinvested surpass this you may have additional tax to pay.

The other point to consider is that any income that is automatically reinvested into a fund is not liable for capital gain tax (CGT). This means the holders of accumulation units would have to keep a record of all the notional distributions so that they can adjust the calculation when they sell their holding in order to work out their capital gain. There is an annual CGT allowance of £11,100 before any tax would be due.

Eco_Miser

greenglide wrote: »

Does he not count as part of the financial services racket then

No more than the CEO of any conglomerate. Berkshire Hathaway is not the US equivalent of an IT or OEIC. It is the holding company for many normal businesses, mostly wholly owned.

DiggerUK

greenglide wrote: »

Does he not count as part of the financial services racket then or is he as pure as the driven snow and people follow his "advice" because he is being altruistic?

Whether or not Buffett is a racketeer, the returns for Berkshire Hathaway do pass my threshold of 'too good to be true '. My smell test meter readings are much the same.

Questions of how he operates his wholly owned subsidiaries are always being asked.........but many asking, find the answers a bit problematic..._

bowlhead99

DiggerUK wrote: »

Whether or not Buffett is a racketeer, the returns for Berkshire Hathaway do pass my threshold of 'too good to be true '. My smell test meter readings are much the same.

You mean they do pass the test and smell fine as they are a transparent public company? Or they pass beyond your threshold to accept them because you have not been following the last 50 years of highly public commentary on the firm and its holdings and do not understand how to operate or value businesses?

Questions of how he operates his wholly owned subsidiaries are always being asked.........but many asking, find the answers a bit problematic..._

I expect that is because 'many asking' have no idea how they themselves would operate any one of those wholly owned subsidiary such as a massive insurance company like Geico, a freight rail network like BNSF, a restaurant group like DQ, or other brands such as Fruit of the Loom or Duracell.

So, if he were to tell you how he operates them you would find it 'problematic' because you'd then have to work out whether that was the answer you expected because you are not a specialist in running huge businesses in any of those industries at boardroom level.

But hey, it's easy to cast aspersions on the work of others by alluding to the fact that someone once asked a question about what they were doing and found the answer 'problematic', without giving any details. Clearly as a $400bn company that's been in the public eye for many decades, there will have been plenty of questions asked about all aspects of its operation, and over those decades no doubt there is at least one person on the planet who asked a question, got an answer, and thought they would have perhaps preferred a different answer.

I can see why you would perhaps struggle to acknowledge the legitimacy of WB's returns as they are from things like 'strategically investing into and owning profitable companies which make money every minute of the day and deliver that to their shareholders via dividends and asset growth' rather than your own area of expertise which is 'hope the market price of this metal goes up faster than inflation'.

DiggerUK

"transparent public company"......it's a novel idea, somehow I don't think it will ever catch on.

Nobody here has been following Berkshire Hathaway for the last 50 years; and nobody here has ever, nor will ever be, in charge of such an organisation. No need to waffle Mr. head.._