The Widow’s Portfolio

The Widow’s Portfolio

What is the Widow’s Portfolio?

The Widow’s Portfolio is a portfolio described by Warren Buffett originally in a CNBC interview that he would have no qualms leaving his widow to own. He wouldn’t leave his widow with Berkshire Hathaway Stock leaving her with no idea when to buy or sell. The purpose of the portfolio is to be incredibly simplistic and to provide a place for a widow to continue to earn returns but safely so.  The portfolio would provide growth to stave off inflation and to counteract the cash needs of the widow while remaining simplistic.

The Widow’s Portfolio is very similar to our Best Way to Invest 10K and is designed for those that wish to invest and build a retirement but do not have the requisite knowledge to select individual securities or to attempt to ascertain values. There is no shame in investing like the widow.

Key Characteristics of the Widow Portfolio for investing

  • Easy to Manage.
  • Low Fees
  • Continue to earn satisfactory return to live on without having to worry about stock market values
  • Protect and grow the earning power of the widow

Example Widow’s Portfolio for investment

90% VTSMX Vanguard Total Stock Market Index Fund Investor Shares (S&P 500 if not possible)

10% VBMFX Total Bond Market Index (Short Term Bond Fund)

Brief Explanation of investing via the Widow’s Portfolio

If Buffett died and he had to set up his widow this is what he would do for investment. It would allow her to continue to compound while providing an income. In the current environment Warren mentioned he wouldn’t own any bond funds but the purpose of the Bond Fund is so that if there is an immediate draw down in markets and cash is needed the widow is to sell the bonds first. If you’re younger and using this method you could allocate the Bond Market funds to the Stock Market in a crash and increase your investing returns going forward.

The Widow’s Portfolio will provide satisfactory investing returns and allow you to live on dividends and yield for the bonds and is very similar to what we preach to the average investor. The quicker and larger of a retirement fund you build up the better!