Where Did Warren Buffett Advise His Wife to Put Her Money?

Warren Buffett's Advice is...
Buffett likes…

Darling Put Your Cash In…

Warren Buffett? Yeah, you know him, investment legend who’s still going strong in his ‘80s.

The sage of Omaha isn’t fooled by his own genius though. He knows he’ll shuffle off this mortal coil at some point.

And it looks like trackers are his best bet.

Not the type you use in spread betting… I don’t think short-term leveraged trading would be his thing… but close.

In spread betting, many of us trade the FTSE 100, Dow Jones, DAX 30, S&P 500 etc.

Warren E. Buffett has advised his wife to put most of the cash into an S&P 500 index fund.

This is somewhat different to spread betting, even if both markets are based on the S&P 500 index.

The gent from Nebraska has suggested a long-term buy with zero leverage, a small fee to buy and close, and perhaps a small yearly fee.

In contrast, a spread bet can be shorted but a spread bet is poor value for a long-term trade:

  1. The overnight financing fees would add up after 2-4 weeks
  2. With a long-term trade there is the risk of large spikes closing out your trade
Anyway, the point of this article is to remind us all that the are many different types of investment and if the man who’s worth over $70bn says an S&P 500 index fund is for a good bet for a low risk long-term investment then we are all ears.

The quote below is from the 2014 note to Berkshire Hathaway shareholders (page 20, paragraph 6).

Yes, this is from 2013… but he was talking about long-term investing so we’d suggest it’s still valid.

My money, I should add, is where my mouth is: What I advise here is essentially identical to certain instructions I’ve laid out in my will.

One bequest provides that cash will be delivered to a trustee for my wife’s benefit.

(I have to use cash for individual bequests, because all of my Berkshire shares will be fully distributed to certain philanthropic organizations over the ten years following the closing of my estate.)

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 suggest 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

Upside So Far on S&P 500 Index?

  • info_outlineS&P 500 level on 28 Feb 2014: 1516
  • info_outlineS&P 500 level on 21 July 2017: 2468
  • trending_upHe’s up 63%… minus his “very low-costs”

AuthorAlex Turner

Senior Editor, SpreadBetMagazine

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S&P 500 Stock Market Spread Betting Guide

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