Warren Buffett will probably never retire. He’s been quoted dozens of times saying that he loves what he does and he wants to do it until he simply can’t any longer. And, with his uncanny ability to pick stocks and invest in companies, the Oracle of Omaha definitely wouldn’t have anything to worry about if he did decide to retire. He’s the second richest man in the world, at the time of writing, and his net worth is more than $70 billion.
However, if he did have to worry about retirement and setting aside money, what would he do?
Fortunately for us, Buffett has talked about this in the past and, as with most things Buffett, his advice is far from complicated:
“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.”
This is the exact same advice that Buffett gave for the people governing the trust he intends to leave behind for his wife. In short, he practices what he preaches, which means that, as with many things, Buffett stands behind his advice.
Of course, it should be no surprise as Buffett is a huge fan of index funds. He even made a bet for charity that they would outperform stocks picked by hedge fund managers. The S&P low cost index funds generally have annual fees at around 0.055% of the account balance—or around $55 on an $100,000 investment—making it incredibly affordable for the average person. It’s actually around 20 times less expensive than the average fund.
Additionally, this portfolio setup is simple, which in some ways alleviates the risk and self-doubt with a more complicated setup. Sometimes, simplicity is the best way to go; a mantra that Buffett supports wholeheartedly throughout his life.