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Where should you invest your first million?

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My friend Tim Ferris (author of the Four Hour Workweek, which I reviewed here and hundreds of iwillteachyoutoberich readers bought) asks Warren Buffet how someone should invest their first million.

What do you think Warren Buffet says?

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16 Comments on "Where should you invest your first million?"

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Devin Reams
8 years 3 months ago

This must be an excellent affirmation for you. Way to go…

Lisa DiMona
Lisa DiMona
8 years 3 months ago

Right again, Ramit. Interesting that comment about Ben Franklin, too. I’m now remembering an early title we tossed about, which you should still use, somehow.

Joe Ranft
8 years 3 months ago

My guess would be in an index fund – low fees and no attempts by a money manager to try and beat the market. Managers like Buffet are rare, and most are actually just lucky, so you’re better off with an index.

Tage
8 years 3 months ago

Great, solid advice. I like how he deliberately states that people will not tell you to put money into index funds because they will not make commissions off of it. How can you argue with the richest man in the world?

Paul Christiansen
8 years 3 months ago
I agree that index funds are an excellent choice for most individual investors. Why, then, do I host a web site whose raison d’etre is to help investors – individual as well as institutional – discover tomorrow’s best-performing stocks . . . today? The answer to that question is both simple and compelling: There always have been – and it can reasonably be argued that there always will be – select stocks that decisively outperform the market averages. Most investors are familiar with the performance of Microsoft and Intel during the ‘80s and ‘90s, Dell Computer and Cisco Systems during… Read more »
Marco Almeida
Marco Almeida
8 years 3 months ago

The “and get back to work…” part of Buffet’s answer is the message he wanted to pass. Work. Don’t let investing distract you.

ekrabs
ekrabs
8 years 3 months ago

Excellent blog article.

I especially like his simple but elegant answer of index funds and getting back to work.

Kevin Sweeney
Kevin Sweeney
8 years 3 months ago

Wow…that was almost spot on with what I was about to say (I thought this was just an “Ask the Readers” type post).

Anyways, I was about to say that I’d throw it in some AAA bonds and keep doing what I do. I’m 23 and I love my job 🙂

Evan
Evan
8 years 3 months ago
Holding an S&P 500 index fund over the last 10 years would have given you about 5% average return in that time. Factor in inflation and if that investment happened to be in a taxable account and your return is basically nothing. All the while, your are subject to major market risk and fluctuations. Buffett made his money through company takeovers/risk arbitrage and being a fierce negotiator for his company/shareholders….not by investing in an index fund. This is a classic case of being quoteable, but not correct. By the way, I’m honestly a huge WB fan! Below is the url… Read more »
ekrabs
ekrabs
8 years 3 months ago
Evan, you bring up a good point that’s worth elaborating. Well, let’s not beat around the bush. Buffett is a better investor than the vast majority of us. It’s as simple as that. Yes, he does things differently from us, but that’s because he is able to mitigate the risk that most everyone else would be exposed to simply because of his skill level. And hence, he is also able to enjoy the higher return. Truth is, Buffett’s investment style is also notoriously cautious. And I don’t think he’s being hypocritical by saying that a 30 year old (with an… Read more »
Rachel
Rachel
8 years 3 months ago

It’s amazing to read through the comments on Tim’s blog. In the face of simple, sound advice from the world’s investment guru, you find so many people who apparently know better that Warren Buffett and offer their recommendations on investing in hedge funds, real estate, start-up companies, etc. Kind of unbelievable, actually.

David Shafer
8 years 3 months ago

Funny stuff. One question, knowing that Buffett has outperformed the S&P 500 by a very wide margin over 43 years, why would you not just buy Berkshire Hathaway B’s?

Sometimes the simplest answers are right in front of you!

ekrabs
ekrabs
8 years 3 months ago
David, that’s another very good question… one that I hope someone will step up to the mic and ask Buffett some day. This is just my personal opinion, but while I hero-worship Buffett and strive to learn as much as I can from him, the truth is, I think Berkshire shares are currently over-valued. Oh yeah, I went there. Why do I think this? In short, Buffett has become more than an iconic investor or even a household name. Like it or not, he has also become Berkshire’s best-selling brand! And he doesn’t seem to mind at all! I think… Read more »
Evan
Evan
8 years 3 months ago
ekrabs, very good points. I’m definitely not saying I know more than WB so don’t get me wrong! My point is that he would not follow his own advice of investing in an index fund and getting back to work. At least that is not what he has done… The key here that was mentioned above is that yes, this is the best advice for your average 30 year old working full time with limited knowledge of investing. Another key point is that it is not about BEATING the market year in and out. It is about limiting risk. “Rule… Read more »
Ryan McLean
8 years 2 months ago

Warren Buffet is the man.
Hey just a tip (something I have found frustrating with your site)
There are not enough posts per page. So when trying to scrool through and read all your latest posts I had to click on new page about 5 times to find a post I really wanted to read. I would prefer if you had more than 2-3 posts/page.

Love the site, love the content, keep writing

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