A Wealth Plan Fit for Warren Buffett's Wife

By Sean Michael Cummings, analyst, True Wealth

It's easy to treat your cash as well as Warren Buffett would treat his wife's...

The Berkshire Hathaway CEO is still alive and well at 93. And at a net worth of around $133 billion, he's one of the most successful investors in the world.

No one understands markets or money like Buffett. So you might wonder what kind of financial wizardry he built into his final trust...

But Warren gave deceptively simple instructions for his wife's inheritance. He shared them in a shareholder letter back in 2013...

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.

Now, of course, how you invest depends on your financial goals...

When you're late into retirement, your first priority should be preserving the wealth you've already built. That's why Buffett wants his wife to hold on to their gains above all.

Buffett isn't trying to do anything fancy. But chances are, if you're reading this, you're still looking to build wealth for the future. That means you have decisions to make... especially if you're looking to beat the market.

The good news is, you probably have a secret weapon on your side. And despite what you may have heard, it's not only for young investors who are just starting out.

It's what helped Buffett amass his fortune. And you can use it to make 10 times your cash... in less time than you might think.

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The biggest investing returns come to those with patience...

In this day and age, patience is in short supply. Social media is full of influencers touting get-rich-quick schemes and using risky leverage.

They're all selling the same message: The only path to wealth is to invest dangerously.

But one of your best advantages in the market is a lot simpler. It's the magic of compounding.

You can do this in safe investments a lot more easily than in risky speculations. Plus, the more volatile the stock, the likelier you are to let fear take over – even when your investment is working.

Best of all, compounding takes less time than you might think.

To test this, I figured out what year an investor would have had to invest to get a 10 times total return on their capital by the end of 2023...

I'm talking about a multiplier, not a percent increase – the kind of growth that turns $10,000 into $100,000.

It might seem like you'd need to start decades back, around the dot-com crash, or even earlier. But in fact, the market just completed a 10 times rally over the past 15 years. Take a look...

If you bought and held the S&P 500 since the 2009 bottom, your portfolio would show a 10 times increase today. That's not an inconsiderable amount of time... But it's not the eternity you might expect, either.

Now, let's say your eye was on the 100 times gain – enough growth to turn $10,000 into $1 million.

A 100 times return may appear to take a lifetime. And it does take longer than a 10 times return. But a 100 times gain today could have started with a portfolio that launched in the early 1980s, thanks to the power of compounding.

It's the kind of prudent strategy that got Warren Buffett where he is today. And it works even better with great individual companies... the kinds of high-quality, reliable stocks that outperform over the long term.

So don't assume it's too late to build the kind of wealth you want – or that you can only get there through a crazy stroke of luck.

You don't have to put your investments in peril to see 10 times gains or higher. You just have to be willing to wait... and let compounding work its magic.

Good investing,

Sean Michael Cummings

A Wealth Plan Fit for Warren Buffett's Wife

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