Advice for retirees: Warren Buffett’s 90/10 rule
Warren Buffett’s #1 money tip for retirees is a method that allocates 90% of investment capital into stock-based index funds while the remaining 10% of money is put into lower-risk investments.
Buffett’s favorite exchange traded index fund is one that tracks the S&P 500 like the SPDR SPY ETF or Vanguard’s VOO. He has seen that the S&P 500 beats the majority of all mutual fund managers and that the ETFs also save investors a lot of money with much lower management fees that add up over time.
In a letter to Berkshire Hathaway shareholders, Warren Buffett outlined his investing plan to use the 90/10 rule regarding his wife’s inheritance, which will be invested 90% in an S&P 500 index fund and 10% in government bonds.
This keeps 90% of retirees capital growing by tracking the increase in prices of 500 of the best U.S. companies and also keeping 10% of capital safely in short term bonds to be spent on living expenses.
$Warren Buffett Portfolio (LIST2999.US)$ $Berkshire Hathaway-A (BRK.A.US)$ $Berkshire Hathaway-B (BRK.B.US)$ $Apple (AAPL.US)$ $S&P 500 Index (.SPX.US)$ $S&P 500 ETF (LIST2712.US)$ $Bond ETF (LIST2730.US)$ $Fidelity Covington Trust Total Bd Etf (FBND.US)$ $SPDR S&P 500 ETF (SPY.US)$ $Vanguard S&P 500 ETF (VOO.US)$
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Some famous words of Buffett. I hope it's useful to you. : )
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whqqq : The S&P 500 index is a very diversified by sector for a smoother equity curve.
Mike Hunt : Sorry, but in times of 9% inflation and a bear market that doesn’t work. You have to earn 9% return after taxes just to stay even. SQQQ is only thing that might do that. You can’t always be long. That works OK in a bull market with low inflation. To be a good investor you have to be flexible and be able to earn a good return regardless of which direction the market goes.
Boonday : Old News