Your Wealth Reserve: Is Warren Buffett’s portfolio right for you?

Is Warren Buffett’s portfolio right for you?

Why does Buffett recommend buying and holding only two Vanguard funds for retirement? Is this strategy right for you too? In his letter to stockholders of his business, he wrote: "I believe the 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." Buffett credits “compounding” for his astounding investment success. So he advocates a low-cost index fund of the 500 largest companies as the best investment for most of us. He warns us against giving high-cost advisors our money since they can’t beat the index and their costs can take up to 63% of our potential accumulations. Nearly 92% of advisor funds have trailed the index of S&P 500 firms over the last 15 years. Over time, Vanguard’s 500 Index earned over 11% a year. That means your money doubles every 7 years. Your $250 per month contribution can provide you with $1 million in 35 years. Buffett proved his advice by beating a Wall Street guru with 5 hedge funds. Unless you are smarter than Buffett, Buffett’s way is right for you: https://www.amazon.com/Warren-Buffetts-Vanguard-Funds-Retirement/dp/1496148592

What do you own if you own a 500 Index fund?

Why is a 500 index fund growing so much? The Vanguard 500 Index fund has grown at 30% over the last year, 16% over the last 3 years, and 16% over the last 5 and 10 years. This is very unusual. Historically this index has grown at 11% per year. Info tech is the main reason for this trend as you can see by the largest contributors to the index’s growth. These corporations make up 30% of the Vanguard 500 Index fund:

1 Microsoft Corp.

2 Apple Inc.

3 Alphabet Inc.

4 Amazon.com Inc.

5 Tesla Inc.

6 Meta Platforms Inc.

7 NVIDIA Corp.

8 Berkshire Hathaway Inc.

9 JPMorgan Chase & Co.

10 UnitedHealth Group Inc.

If you own the companies in the index, you own some of these companies and their gains and dividends. If you pay low-fees like Vanguard’s version at 0.04%, your account grows faster than if you pay 1-2% a year. You own a broad diversified part of the world stock market. Use Warren Buffett’s strategy "A very low-cost index is going to beat a majority of the amateur-managed money or professionally-managed money."

Less you pay; more you earn: https://www.amazon.com/Warren-Buffett-Millionaire-money-snoring/dp/1508887381

Retirement budget: do a dry run now

What will you have to spend and what is your spending plan? Going on a journey like this one without a plan is asking for a disaster. You may need money to last 30 years—60 to 90—for at least one in your family. Stay ahead of inflation—the silent ‘killer.’ Unless you plan to work till you drop, a plan can help you succeed not just survive. If you began early enough you could have $2 million to spend without income taxes with the New American Retirement System. If not, you need to make a dry run now so you can make adjustments. You will need to make a Spending Plan for both of you. Estimate your Required Minimum Distributions from pensions and IRAs and how much tax you will have to pay. Find any old pensions and accounts you may have left behind.

You will need every penny. https://www.amazon.com/Your-Retirement-Budget-Investments-Income/dp/1483946487

Is a 401k annuity right for you?
Several mutual fund firms are offering an annuity guaranteed income from your 401k or 403b. Many workers have said they are interested in putting some of their retirement savings into an investment option that would guarantee them monthly income when they retire and help ensure they don’t outlive their savings. This makes sense for many since the guaranteed pensions of the past are gone. Employers do not want the risk of maintaining a pension payout for their employees for life. Recent law has reduced the fiduciary risk for employers and made it easier for them to provide annuities as a retirement plan distribution option. This may be a great option for you if you have other money invested to help defeat inflation during retirement. However, the monthly income guarantee comes at a cost. Firms take 1-3% annual fees to provide “monthly income you can’t outlive.” But the amount is cut in HALF by inflation over time. There are less expensive ways to obtain a “steady, reliable stream of income to help cover your expenses in retirement.” Be careful. Annuities are not cancelable.

Look at all options first: https://www.amazon.com/Best-Annuity-Strategy-Income-Growth/dp/1497532019

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