A Simple Guide for Investors
The 90/10 rule comes from legendary Warren Buffett’s advice for average investors. Put 90% of your money into a low-cost S&P 500 index fund and the other 10% in short-term government bonds.
The idea is simple: most people don’t have the expertise needed to make great decisions about investing in individual stocks—don’t take that as a knock since Wall St. money managers often fail to match the returns of simple index funds. So save money on management fees, bet on the American economy, and be patient, Buffett says.
But is this a good strategy for all investors? Below, we take a closer look at the thinking behind the 90/10 rule and whether it stands up to the test of time.
Key Takeaways
- Warren Buffett’s 90/10 strategy involves…
