An early retiree who interviewed 100 millionaires found many of them built their fortunes using a simple investment strategy championed by Warren Buffett

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John, who runs personal finance blog ESI Money, has spent the past few years interviewing millionaires.
He found that for many of them, their investing strategy is surprisingly simple: They invest in low-cost index funds, a strategy recommended by experts like legendary investor Warren Buffett.
Many of the surveyed millionaires also said that they checked their investments daily — but they rarely made any changes.

Investing doesn’t have to be as complicated as it looks.

John of personal finance blog ESI Money, who retired early at the age of 52 with a $3 million net worth, interviewed 100 millionaires over the past few years and found that many of them use the same, simple investing strategy.

The median net worth of millionaires John interviewed was $2.3 million. While 90% of them were men, 93% were married, so John, who doesn’t share his last name online, said he considers the women millionaires as well. The median age of the people he surveyed was just under 50.

For many of them, their investing strategy boils down to this: investing in low-cost index funds.

“The high returns and low costs of stock index funds (I personally prefer Vanguard as do many millionaires) are the foundation that many a millionaire’s wealth is built upon,” he wrote in a blog post.

Experts agree that investing in index funds is a winning strategy when playing the stock market for two reasons: They’re broadly diversified, eliminating the risk of picking individual stocks, and they’re low-cost.

As one millionaire told John: “I’m no genius, I can’t predict the markets, and I don’t enjoy following the market.”

He continued: “For that reason I used the VTSAX index fund for the majority (95%) of our investments. I love the fund’s low cost (.04%), diversification, and simplicity. We do not have any bond allocation because when we turn 60, we’ll receive pensions of roughly $50k combined.”

Read more: A self-made millionaire who interviewed 100 other millionaires found there’s a surprising habit many have in common

“Index funds are the most straightforward, cheapest, and most likely way to see strong long-term returns,” former hedge fund manager Chelsea Brennan, who managed a $1.3 billion portfolio, previously wrote in a post for Business Insider.

“Index mutual funds offer instant diversification and guarantee returns equal …read more

Source:: Business Insider

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