Editor: Crass Cash
Warren Buffett shocked the financial planning world last year when he released exactly what was to be done with his wife's inheritance. He wanted the actual funds to be broken up into two categories. The first is a low-cost index fund that follows the S&P 500. The rest should be put in short term treasuries. That's it!
90% would go into the index fund and the other 10% would go into treasuries. Keep It Simple Stupid!
The last thing that your heirs need to deal with is a complicated estate plan while they're grieving. Obviously they're free to do with it as they please when you die unless you set it up in a trust, but if you "trust" them then this is a pretty good plan.
If the person enacts the 3% rule as I've previous instructed than they could quite easily live off of the 10% treasuries for 4 years while the stocks appreciate and while you also get dividend income. There's no guarantee that the stock market will be higher in 4 years, but there's a pretty good chance it will be.
Ideally you'd want to be in a situation where the heir can live off of the dividend income exclusively for the rest of their life without ever having to touch the principle. Take a look at the website firecalc.com to see how much you need to virtually eliminate the possibility of running out of money.
For instance, I would need to accumulate $1,100,000 in order to live for 60 years and not run out of money. Assuming my current spending rate of $36,000 per year. What's yours and what would your heir need?
90% would go into the index fund and the other 10% would go into treasuries. Keep It Simple Stupid!
The last thing that your heirs need to deal with is a complicated estate plan while they're grieving. Obviously they're free to do with it as they please when you die unless you set it up in a trust, but if you "trust" them then this is a pretty good plan.
If the person enacts the 3% rule as I've previous instructed than they could quite easily live off of the 10% treasuries for 4 years while the stocks appreciate and while you also get dividend income. There's no guarantee that the stock market will be higher in 4 years, but there's a pretty good chance it will be.
Ideally you'd want to be in a situation where the heir can live off of the dividend income exclusively for the rest of their life without ever having to touch the principle. Take a look at the website firecalc.com to see how much you need to virtually eliminate the possibility of running out of money.
For instance, I would need to accumulate $1,100,000 in order to live for 60 years and not run out of money. Assuming my current spending rate of $36,000 per year. What's yours and what would your heir need?
RSS Feed