Warren Buffet’s encyclical has arrived, 21 pages of investment advice hot off the presses from Omaha, USA.
of insights about the investment horizon. Among the highlights of Warren Buffett’s annual letter to shareholders is that he remains extremely bullish on America, and with almost $50 billion in cash he’s on the hunt for big acquisitions but gives readers no clue to where he’s hunting.
Buffett also writes about a stellar real estate investment he made in property adjacent to NYU back in 1993. That investment, run by New York real estate legends Larry Silverstein and Fred Rose shows that billionaires can make huge scores with good timing. But what about the rest of us?
For the answer to that question readers and Buffett followers can just skip to page 20, because one paragraph says it all up. When it comes to Buffett’s advice for his own wife — the 60-something Astrid Menks — it’s simple.
Assuming the 80-something Buffett dies before her, the Sage of Omaha has left these instructions in his will: “My advice to the trustee [for my wife] could not be more simple: Put 10 percent of the cash in short-term government bonds and 90 percent in very low-cost S&P 500 index fund.” That’s it.
No Berkshire stock for the current Mrs. Buffett, no rocking real estate investments, no hot hedge funds, just a plain vanilla index fund (Buffett recommends the low-cost Vanguard funds).
Basically, that’s all the so-called “average” investor needs to take away from Buffett’s 2013 annual letter and the 48 letters that came before it.
Don’t do what Buffett does. After all he’s the 4th richest person on the planet and has more than 60 years of investing prowess under his belt. No, do what Buffett is doing for his wife.
As he clearly points out in his letter, to those who read that far, is that he believes the returns from investing in a very low cost index fund “will be superior to those attained by most investors — whether pension funds, institutions or individuals — who employ high-fee managers.”
Don’t chase the Oracle for returns, listen to his advice to his wife.