Bellmore Group Management Services, Tokyo Japan 3 ways to invest like Warren Buffett

Bellmore Group Management Services, Tokyo Japan on 3 ways to invest
like Warren Buffett
A cottage industry of asset managers, financial advisors and investment can give you their takes on how to be just like
Warren Buffett.
You can skip the circus of wannabes and hear from the Oracle of Omaha directly in his annual letter to Berkshire
Hathaway a shareholder, which was published Saturday.
In his most recent letter, Buffett praised the virtues of index funds, railed against the steep fees hedge fund managers
charge and said "investors who avoid high and unnecessary costs and simply sit for an extended period with a collection of
large, conservatively-financed American businesses will almost certainly do well."
You don't have to be a stock-picking whiz to benefit from his success. Buffett has already detailed three ways to emulate
him in your retirement portfolio.
The two-fund portfolio
Buffett outlined an investing strategy for ordinary investors in his 2013 annual shareholder letter:
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. (I suggest Vanguard's.) I believe the trust's long-term results from this policy will be
superior to those attained by most investors – whether pension funds, institutions or individuals – who employ high-fee
managers.
You can buy U.S. Treasurys directly or invest in a low-cost government bond fund. (Vanguard's short-term government
bond index fund charges 0.16 percent annually with a $3,000 minimum investment, or 0.07 percent for the exchange-
traded fund version.)
Vanguard offers several S&P funds: a traditional mutual fund that charges 0.16 percent annually with a $3,000 minimum
investment or one with a $10,000 minimum and a 0.05 percent annual fee.
You can also buy a Vanguard 500 ETF that has an expense ratio of 0.05 percent. If you want a rock-bottom price, iShares
Core S&P 500 ETF charges 0.04 percent. With ETFs, and unlike with mutual funds, you may have to pay commissions
when you trade them.
"Warren Buffett's investment strategy is a good one for investors and signals that he doesn't believe that most people,
including professionals, can beat the market long-term, so just be the market and buy low-cost index funds," said
Stephanie Genkin, a certified financial planner in Brooklyn.
Buffett put his money where his mouth is when it comes to indexing. He bet $1 million for charity that the Vanguard 500
Index Fund Admiral Shares would beat a basket of five hedge funds selected by Protégé Partners, a New York City asset
management firm over 10 years starting in 2008.
The index fund has tripled the performance of the combined returns of five unnamed hedge funds as of the end of 2015. A
likely Buffett victory will benefit Girls Inc. of Omaha while Protégé is playing for Ark, an international youth education
charity based in the U.K.
Berkshire Hathaway stock
You can share in gains of one of the world's greatest capital allocators by owning stock in Berkshire Hathaway directly.
Buffett's holding company has beaten the total return of the S&P 500 over the past 10 years with an annualized return of
9.1 percent, compared to 7.3 percent for the index.
Berkshire stock has two share classes. The primary difference between the share classes is the price. Class A stock recently
cost more than $255,000 per share while Class B is 1/1,500 of that sum, recently at $170 per share.
You can convert Class A stock into Baby Berkshire shares, but not the other way around. Class B shares, launched in 1996,
also have slightly less voting rights.