After he dies, Warren Buffett said 90% of his wife's inheritance will go into this one investment — and it's not Berkshire Hathaway. Here's why

In his 2013 letter to Berkshire shareholders, Buffett shed light on the directives he has included in his will.

“One bequest provides that cash will be delivered to a trustee for my wife’s benefit,” he wrote. “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.”

While this strategy is straightforward and doesn't require constant monitoring or active trading, Buffett expressed a significant amount of confidence in it.

Here are a few ways you can take Buffett’s advice and apply it to your own portfolio.

Don’t pick stocks, do this instead

Buffett’s preference for recommending index funds stems from his belief that stock picking is not an optimal strategy for average investors.

At the 2021 shareholders meeting, he stated frankly, “I do not think the average person can pick stocks.”

This is where index funds come into play. It’s a passive investment strategy accessible to everyone — even those without Buffett’s wealth.

In fact, even your digital nickels and dimes will suffice. There’s a popular app called Acorns that invests your spare change for you automatically.

All you need to do is sign up and link your cards, which just takes a couple of minutes. Then it’ll round up your recent purchases to the nearest dollar and invest the difference — your spare change — in a diversified portfolio.

This effortless strategy offers a practical and low-barrier entry into the world of investing.

It’s worth noting the S&P 500 surged 24% in 2023. By investing in an S&P 500 index fund, investors get exposure to 500 large companies across various industries.

The last 10%?

Remember, Buffett didn’t advise going all-in on the S&P 500. He also recommended allocating 10% of the cash to short-term government bonds.

Investing in short-term government bonds can be appealing for those seeking lower-risk investments or a stable, relatively predictable source of income. Furthermore, these bonds are more liquid than long-term bonds, making it easier for investors to access their funds without significant penalties or loss in value.

The optimal allocation hinges on one's personal financial situation and the current stage of their investment journey.