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:
- The overnight financing fees would add up after 2-4 weeks
- With a long-term trade there is the risk of large spikes closing out your trade
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?
Remember: Spread betting, CFDs and forex trading carry a high level of risk. You can lose more than your initial investment. These products are not suitable for all investors. Only speculate with money that you can afford to lose. Make sure you fully understand the risks involved and seek independent financial advice where necessary.