Thursday, March 6, 2014

Warren Buffet's Retirement Advice

There are probably very few investors in the world who are better known or more successful than Warren Buffett.  His Berkshire Hathaway fund, headquartered in Omaha, Nebraska, has done very well over the decades.

According to the Motley Fool investment advisers, at a shareholder's meeting in 2004, Mr. Buffett was asked by a participant how to invest their retirement savings.  Here is a summary of his comments:

*  First, he said, he and his associates never recommend that people either buy or sell shares of Berkshire-Hathaway.

*  Instead, they recommend that nearly everyone should invest their money in low-cost index funds, and spread the investment out over a ten year period of time, buying a little at a time.  According to Mr. Buffett, people who do this will be more successful than 90% of the people who try to pick individual stocks.

* According to Mr. Buffet, by spreading out your investment in an index fund out over ten years, you are also taking advantage of dollar-cost averaging, which means that your investment costs will be averaged out over years in order to have an average cost that is as low as possible.

* In this particular interview, the only company that he specifically mentioned was the Vanguard Index Funds, because they are cheap and reliable.  Vanguard has a variety of funds, including an S&P 500 ETF (exchange traded fund), a Vanguard FTSE All-World ex-US ETF, and a Vanguard Total Bond Market ETF.   If you invest in a little of each, you will have an extremely balanced investment portfolio.  According to Mr. Buffett, these actions will give you "diversification across assets and time, two very important things."

*  In addition,  he recommended that investors read books by John Bogle.  He said that any investor in funds should read them.  To aid the readers of my blog in finding them, here is a link to the correct Amazon.com page:  John Bogle's books on Amazon.com.

*  Mr. Buffett discourages investors from keeping all their money in cash.  While everyone should have some cash on hand for emergencies, according to Mr. Buffett cash will lose value over time, while the majority of businesses held by exchange-traded funds will become worth more over time.

If you are still at the stage of your life while you are saving for retirement, you may wish to read the books mentioned above, do your own research, and decide for yourself if you wish to follow Mr. Buffett's advice.  While no one investment decision is right for everyone, it is always a good idea to read the opinions of successful investors.  At the very least, Mr. Buffett's advice is likely to be far safer than some of the more risky investments that often tempt us with their promises of high (and often un-realized) returns.

Disclaimer:  I am not in the investment business; all recommendations mentioned in this blog are only presented here in attempt to present my readers with some of the options available to them.  All final investment decisions are purely the decision of my readers.

Source:

http://www.fool.com/investing/general/2013/12/30/warren-buffetts-super-simple-retirement-advice.aspx#.UsGQybS3ikw

You are reading from the blog:  http://www.baby-boomer-retirement.com

6 comments:

  1. Buffett certainly has a voice that carries weight and wisdom and is a great subject for your blog. I saw him interviewed recently on TV and he expressed his views about wealth and his children. He said, "Give them enough money so they can do something, but not so much they can do nothing." Brilliant!

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  4. Buffett certainly knows his stuff. My church had fundraisers where dinner with Warren Buffett was one of the live auction items, and people who won the auction went on to make a LOT of money heeding the advice and wisdom he expressed during the dinner.

    -Kurt
    www.Seniorly.com

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  5. Interesting insight from Warren Buffett that he's never recommending people to BUY, but he's never recommending people to SELL neither shares from Berkshire-Hathaway. What is going to be than? http://www.ea-builder.net

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  6. Interesting insight from Warren Buffett that he's never recommending people to BUY, but he's never recommending people to SELL neither shares from Berkshire-Hathaway. What is going to be than? http://www.ea-builder.net

    ReplyDelete

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