Question

Warren Buffett is a big proponent of a simple asset allocation strategy. He suggests putting 90% of your money in S&P500 index fund (VFIAX) and keep the rest in cash. In fact, he made a bet with a hedge fund manager that this simple asset allocation strategy would beat any other over a 10-year period.

1. Find out information about the bet. Summarize the bet's outcome.
2. Discuss whether/how these outcomes will shape your own retirement/investment strategy.

Answer 1

Warren Buffet the king of return in investments industry. He has generated the best returns in the world.

The Strategy adopted by Warren Buffet was backed by Few foundation pillars:

1. Always keep long term value investment strategy.

2. Invest only where you are able to understand.

3. Always consider the value of whole enterprise when you are going to purchase few shares of it.

4. go for the companies with competition in economy as such companies leads to achievement of bigger goals.

5. Always focus of quality companies.

6. Always keep cash in hand also to bang the best deals.

7. Being long term value investment you have to keep patience as compounding takes time.

Warren buffet bet to make better fund management than a fund manager leads him winning of $1 million.

He simply track down the low stock index fund make investment in same with a long term view. As he has taken view of 10 years first but growth in such stock was so fast that he has made $1 million from few thousand $ investment.

In order to keep a good retirement plan strategy adopted by Warren Buffet is best. We have to start investing in very being age and keep the lot in the such index which have competition and have long term growth. So in that case we can make keep our investments 90% part in one bucket so as to get higher returns from same after long period of time.