Warren Buffett is one of the richest men in the world. He is self-made. He didn’t inherit his billions from his mom and dad, He didn’t get his billions from a divorce like Melinda Gates and MacKenzie Scott, he worked for them.
We may be curious about his investment style. Well, he has been investing since he was 11 years old, and his portfolio allocation is 100% stocks, with some cash on the side to buy more stocks. He doesn’t invest in bonds because, as someone who wants to maximize long-term returns, he sees investing in bonds as a dumb investment.
It has been proven time and time again that, on a 10+ year time horizon, stocks consistently outperform bonds. If that’s the case, no one should own bonds if they want to maximize profits. People buy bonds because bonds reduce volatility.
Many people think that as you get older, you should own fewer stocks and more bonds. But that doesn’t make sense. When we reach 65 years old, we continue to live. Many of us are making it to 100 years. If you switch into bonds, you will be leaving a lot of money on the table.
My own portfolio is about 99% stocks and 1% cash. I keep some cash because I like to do some spontaneous spending, and I like to flash a bit of cash when I go to a nice restaurant. At this moment, my dividend returns are more than my cost of living, so I can afford to flash some cash.