Author Topic: Where Warren Buffet will leave his money for his wife.  (Read 4839 times)

NWOutlier

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Where Warren Buffet will leave his money for his wife.
« on: February 27, 2014, 09:07:46 AM »
This gives me a bit of confidence in indx fund choices we all discuss.  Just sharing - this came out yesterday.


Warren Buffett's Aggressive Portfolio
The world's most famous stockpicker is putting family money in an index fund, and his asset allocation is bullish indeed.

http://money.msn.com/money-video/default.aspx?from=gallery_en-us&videoid=c8d9039e-a750-b3bc-7a0b-41c900fe36b2&sf=Relevancy#2

Steve

matchewed

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Re: Where Warren Buffet will leave his money for his wife.
« Reply #1 on: February 27, 2014, 09:26:14 AM »
Is there a transcript or summary? Videos suck. :)

Beerswiller

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Re: Where Warren Buffet will leave his money for his wife.
« Reply #2 on: February 27, 2014, 09:38:46 AM »
His suggested asset allocation is near the bottom of this article:

http://finance.fortune.cnn.com/2014/02/24/warren-buffett-berkshire-letter/?iid=SF_INV_River

matchewed

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Re: Where Warren Buffet will leave his money for his wife.
« Reply #3 on: February 27, 2014, 09:44:06 AM »
Thanks. We do have to understand that this is all relative. The AA for Buffett will and should be different than anyone else. It is no surprise that he advocates index funds, I'd just like to warn people not to take Buffett talk literally and start a 10% cash/90 % S&P 500 AA because that's what Buffett does. Just like all AA do what makes sense for you and your situation.

NWOutlier

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Re: Where Warren Buffet will leave his money for his wife.
« Reply #4 on: February 27, 2014, 11:37:21 AM »
I have a weird take on AA....

Call me funny; but - let's say I have 1 billion in assets that is 100% stock.... heck, make it only 15 million...  if the market corrects even 60-70% I am still left untouched (meaning my mustachian lifestyle, I can still withdraw everything I need to live).  While that correction is in place, my goal/plan is to have 2-5 years of liquid cash (living expenses + a float for investing) to continue to buy during that down period... 

so, in Buffet's case, 90% would be ok - right?

For me, anything above 2million in investments can sustain a 30% correction and still sustain 100% of my planned income... (it could reduce in value down to 1.4M and I can continue to live on: 36-54k per year.

Please excuse my ignorance, I am new at this. 

Steve

matchewed

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Re: Where Warren Buffet will leave his money for his wife.
« Reply #5 on: February 27, 2014, 12:42:14 PM »
I have a weird take on AA....

Call me funny; but - let's say I have 1 billion in assets that is 100% stock.... heck, make it only 15 million...  if the market corrects even 60-70% I am still left untouched (meaning my mustachian lifestyle, I can still withdraw everything I need to live).  While that correction is in place, my goal/plan is to have 2-5 years of liquid cash (living expenses + a float for investing) to continue to buy during that down period... 

so, in Buffet's case, 90% would be ok - right?

For me, anything above 2million in investments can sustain a 30% correction and still sustain 100% of my planned income... (it could reduce in value down to 1.4M and I can continue to live on: 36-54k per year.

Please excuse my ignorance, I am new at this. 

Steve

You can't have an AA that is 100% stocks and then still have 2-5 years of cash, as that cash wouldn't be stocks... they'd be cash. Unless your 2-5 year cash is your emergency fund, but I'd say if your emergency fund is reaching that size then it is time to roll it into your AA and consider it part of your overall portfolio.

In Buffett's case 90% whatever would be ok. Once a certain amount of money (stash) is reached normal risks aren't really all that applicable assuming a normal/small spending amount.

NWOutlier

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Re: Where Warren Buffet will leave his money for his wife.
« Reply #6 on: February 27, 2014, 01:34:53 PM »
Ah Yes! Mattchewed! You're correct!

so, I guess mine would be a 90/10 split (AA) where 90 is stocks and 10 is the cash. I completely agree, I misspoke.

Thanks!

Steve


Nords

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Re: Where Warren Buffet will leave his money for his wife.
« Reply #7 on: February 27, 2014, 07:46:11 PM »
Call me funny; but - let's say I have 1 billion in assets that is 100% stock.... heck, make it only 15 million...  if the market corrects even 60-70% I am still left untouched (meaning my mustachian lifestyle, I can still withdraw everything I need to live).  While that correction is in place, my goal/plan is to have 2-5 years of liquid cash (living expenses + a float for investing) to continue to buy during that down period... 
Shucks, with $15M you could probably ramp your AA up to 98% stocks and still be fine...

NWOutlier

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Re: Where Warren Buffet will leave his money for his wife.
« Reply #8 on: February 27, 2014, 07:51:43 PM »
Hi Nords! :^D

yeah, after I wrote 15M - I thought to myself... that was a bit high... I won't see a number like that in my lifetime (maybe...).  If I keep working and maintain my budgets, I sure could see 15M but too old to enjoy it...  but, to be honest, my goal is actually to leave a bucket of money for my daughter and family that generates cash flow....

it's my hope that I can teach my daughter that keeping the money is more important and that it gives you the ability to 'choose' what you want to do for work or for fun... you could work at a 22k/yr job that is something meaningful, or you could donate your time to something that moves you...

anyway, the 15M was just a dream.  :)... I learned too late the proper mustashian lifestyle to get there.... but, I will be in the "M's" before I leave my job . 

chat soon Nords -! thanks for the post.

Steve

dragoncar

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Re: Where Warren Buffet will leave his money for his wife.
« Reply #9 on: February 27, 2014, 09:52:49 PM »
Ah Yes! Mattchewed! You're correct!

so, I guess mine would be a 90/10 split (AA) where 90 is stocks and 10 is the cash. I completely agree, I misspoke.

Thanks!

Steve

You nailed it

steveo

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Re: Where Warren Buffet will leave his money for his wife.
« Reply #10 on: February 27, 2014, 10:55:51 PM »
Interesting advice from Buffet however personally I think AA can be that simple.

My question would be how much cash (including bonds) do you need in your portfolio and is it really just based on a % figure or on living expenses for a number of years. Say for instance that I need 20 grand to live should I keep say 5 years of expenses in cash. If my portfolio is worth 500k then I would keep 400k in stocks whereas if my portfolio was worth 1 million I would keep 900k in stocks.

soccerluvof4

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Re: Where Warren Buffet will leave his money for his wife.
« Reply #11 on: February 28, 2014, 06:55:02 AM »
More base on your tolerance to Volatility if I am understanding your question properly. My view is if your at a point of FI you do what lets you sleep at night.