Warren Buffett's 90/10 rule to invest for retirement: Does it still work?
Yahoo Finance ·
Warren Buffett's 90/10 rule to invest for retirement: Does it still work? Hal Bundrick, CFP® · Senior Writer Thu, November 5, 2026 at 2:26 PM EST 2 min read When people discuss investment strategies, Warren Buffett's name is likely to come up. One of America's most successful investors, he generated an average annual return of nearly 19% for Berkshire Hathaway shareholders over more than 60 years. That's well above the S&P 500 index's ( ^GSPC ) nearly 11% gain over the same period. His philosophy: Buy undervalued stocks for companies with strong financial fundamentals. However, for the average investor, he recommends just the opposite. For those who don't have the time or inclination to research companies and maintain a portfolio, he suggests low-cost index funds and what many experts might consider an aggressive allocation: 90% in equities and 10% in short-term government bonds. Can the typical, novice investor stick to the high commitment to equities that the 90/10 portfolio advises when the market is down sharply? On Thursday, Nov. 5, the S&P 500 has tumbled 4% to 5% — and is down nearly 5% for the month. What would Buffett recommend? Buffett's take on down markets is often quoted: "You want to be greedy when others are fearful. You want to be fearful when others are greedy." He compared a bear market to a retail sale: "Whether we're talking about socks or stocks, I like buying quality merchandise when it is marked down." He stressed that the most important quality for an investor "is temperament, not intellect." Also read: Here's what to do with your retirement savings in a market sell-off "Following those rules, the 'know-nothing' investor who both diversifies and keeps his costs minimal is virtually certain to get satisfactory results," Buffett wrote in his 2013 letter to Berkshire Hathaway shareholders. "Indeed, the unsophisticated investor who is realistic about his shortcomings is likely to obtain better long-term results than the knowledgeable professional who is blind to even a single weakness." Keep track of your finances for free with My Money
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