Want an investment strategy that the Oracle of Omaha would approve of? You don’t need to spend hours scouring financial statements.
Warren Buffett has a pretty simple strategy that he thinks is the best way for the overwhelming majority of people to invest. Here’s how the legendary chairman of Berkshire Hathaway (NYSE:BRK-A) (NYSE:BRK-B) thinks you should invest, even if you don’t follow the stock market.
1. Buy S&P 500 index funds
While Buffett is without a doubt the world’s most famous stock picker, he doesn’t think most people should invest in individual stocks. For years, he’s embraced S&P 500 index funds as the best way for most Americans to build wealth. By investing in an S&P 500 fund, you become an automatic investor in all 500 companies whose stock the index tracks, including Berkshire Hathaway and many of its top holdings like Bank of America, Coca-Cola, Apple, and American Express.
Buffett has left instructions in his will stating that 90% of his personal wealth should be invested in S&P 500 index funds. The remaining 10% will be placed in short-term U.S. Treasuries.
Although Buffett is a longtime proponent of index investing for most people, Berkshire Hathaway only recently added two S&P 500 funds to its portfolio. In February, its 13F filing revealed that it had purchased shares of the Vanguard S&P 500 ETF and SPDR S&P 500