The Strength of Simplicity
A wise man once said, “Simplicity is the ultimate sophistication,” and no one embodies this wisdom better in the financial world than the “Oracle of Omaha,” Warren Buffett. Considered by many as the GOAT, he has built a net worth over $100 billion primarily by investing in a diverse set of companies through his company Berkshire Hathaway.
Despite his success with various types of investments, his investing recommendation for most investors is simple. Known for his long-term approach, Buffett’s support for index investing using the S&P 500 (500 of the largest US companies), offers invaluable guidance for investors of all levels.
Read on to learn why Buffett thinks simple is good. Very good.
In his 2013 letter to Berkshire Hathaway shareholders, Buffett revealed his own instructions for his family’s wealth management after his passing. These words echoed through the investing world: “Put 10% in short-term government bonds and 90% in a very low-cost S&P 500 index fund.”1
Why would arguably the world’s most successful investor recommend such a simple strategy? According to Buffett, he firmly believes that “long-term results from this policy will be superior to those attained by most investors – whether pension funds, institutions, or individuals.”
Power of the S&P 500
What makes the S&P 500 so compelling? Investors owning an S&P 500 index fund essentially own a small piece of 500 of the largest companies in the US. As the economy grows, these companies generally grow as well. Although the economy and stock prices can go up and down, S&P 500 Index funds have historically generated about 10% annual average investor returns over the past 10, 20, 30 and 40 years2. Stock prices may decline from time to time but have historically always gone on to new highs, rewarding patient investors with a long-term investing approach.
Simplifying S&P 500 Investing with Beanstox
We know people are busy. So, we’re making it simple to follow Buffett’s timeless wisdom. We’re building a FREE3 and easy way for you to invest in the S&P 500 using ETFs and automate building your wealth with recurring investments.
As Buffett illustrates, sometimes the most effective strategy is not the most complex or costliest, but the one that is simple, accessible, and consistent. Soon, with Beanstox, you too can get on your way with smart, simple investing.
1. “Put 10% in short-term government bonds and 90% in a very low-cost S&P 500 index fund.”, “long-term results from this policy will be superior to those attained by most investors – whether pension funds, institutions, or individuals.”: https://www.cnbc.com/2017/02/26/3-ways-to-invest-like-warren-buffett.html
2. S&P 500 return: 40-year annualized return of 11% as of 6/30/2023: Source: Bloomberg Finance LP. Note that it is not possible to invest directly in an index. This product will invest in one or more ETFs designed to track the performance of the S&P 500 index, but results may vary due to expenses and other factors. Returns are before ETF fees.
3. We are excited about the implementation of new products, although there are no assurances that these products will be developed or be offered to Beanstox App users, or that final details on how the products will be invested will not differ from those currently contemplated. Services might be free for a promotional period of time but could be increased at any time at Beanstox’s sole discretion. Clients will be advised in advance of all Fee increases. ETF fees apply.