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Buffett: ‘The best thing to do is buy 90% in an S&P 500 index fund’

At the annual Berkshire Hathaway shareholders meeting live streamed on Yahoo Finance, Warren Buffett gives advice to individual investors.

Video Transcript

- As a follow-up to that, Gerald Silver writes in. He says, "The trustees of your estate to-- I believe you've directed the trustees of your estate to invest substantial assets into the index fund. Isn't that a vote of no confidence to your managers?"

WARREN BUFFETT: Well, no, because we're talking about way less than 1% on my estate. And one thing I'm going to do, incidentally-- I mean, all rich people get advised by their lawyers, set up trusts, so that nobody can see your will and all that sort of thing. My will is going to be a public record.

And you'll be able to check at some point what I've been telling you the truth about, what is going to get done. But 99.7%, roughly, of my estate will either go to philanthropies or to the federal government. And before it does it, I think Berkshire is a very good thing to hold.

But for a given individual, particularly my wife, I just think that having a tiny fraction, which is all it takes for her to do very well for the rest of her life, I just-- I think that the best thing to do is buy 90% in an S&P 500 index fund. Now, the index fund people naturally have started over the time, they market more-- more and more products that go to other indices and everything.

So they're really starting to say to the American public, they're saying, well, you can pick what continent to invest in or you can pick what industry, and we'll sell you something for that. And when they just have gotten through [INAUDIBLE], you know, you really don't know anything about stocks. Just buy the whole index. So I named the 500 indexes one.

But it's-- it's a tiny portion, but it'll be her livelihood. And she'll have all the money she needs and way beyond it, and that's that. But I don't-- I don't mind having the 99.7%, a large portion of it, assuming the laws are the same as now, go to philanthropy, to be kept in Berkshire until they finally are disposed of.