Warren Buffet is a world-renowned investor. Many would consider him the best alive. He’s among the world’s richest men and he made the majority of his money investing in stocks and buying companies. But some day he’ll pass. And he left instructions to the trust administrator on how to invest the money he’s passing on to his wife.
The interesting thing is with all his investing knowledge, Warren Buffet’s plan for his wife’s inheritance are incredibly simple and straight forward. The trustee is to put the money into two investments at an allocation of 90/10. The investments are an S&P 500 index at 90% and short term government bonds at 10%. That’s it.
“My 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. (I suggestWarren Buffet in 2013 Annual Berkshire shareholder letter
Vanguard’s.) I believe the trust’s long-term results from this policy will be superior to those attained by most investors – whether pension funds, institutions or individuals – who employ high-fee managers”.
You can exactly replicate this easily with Vanguard ETF’s. The ETF’s would be as follows.
|VOO- The S&P 500 ETF||90%|
|VTIP- Short Term Inflation Protected Securities||10%|
Automate the Plan
And if you don’t want to maintain the allocation you don’t need to pay a trustee one percent to do it. You could set up this exact pie with M1 Finance and have it managed for free.
Sign up for M1 Finance with this link and you’ll get a $10 bonus for signing up.
Some articles need to be short and sweet. That is Buffet’s plan for the wife’s inheritance. It could be a great model to follow if the world’s most successful investor is choosing it for his family.
I should mention that while I’ve been investing for over 14 years, I’m not a licensed broker or investment advisor and is for entertainment and informational purposes only. Consult an investment advisor before investing money.
I also have an affiliate relationship with M1 Finance and may earn a commission on some signups. I personally use M1 Finance and would not recommend them if I didn’t believe they provide a great no fee service.
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