Warren Buffett, one of the world's most successful investors, has shared plenty of advice over his long career. But one piece of advice stands out as his top rule: “The first rule of investment is don't lose money.” And if you ask about the second rule?
Many novice investors lose money chasing big returns. And that's why Buffett's first rule of investing is “don't lose money”. The thing is, if an investors makes a poor investment decision and the value of that asset — stock — goes down 50%, the investment has to go 100% up to get back to where it started.
Rule 1: Never lose money.
By following this rule, he has been able to minimize his losses and maximize his returns over time. He emphasizes this so much that he often says, “Rule number 2 is never forget rule number 1.”
70/30 is aggressive but reasonable, especially if you have substantial International equities. This is my exact asset allocation and I plan on retiring next year. As stocks keep moving higher, we keep buying bonds (and hold our nose) to rebalance to our target AA.
At age 60–69, consider a moderate portfolio (60% stock, 35% bonds, 5% cash/cash investments); 70–79, moderately conservative (40% stock, 50% bonds, 10% cash/cash investments); 80 and above, conservative (20% stock, 50% bonds, 30% cash/cash investments).
The 90/10 rule in investing is a comment made by Warren Buffett regarding asset allocation. The rule stipulates investing 90% of one's investment capital toward low-cost stock-based index funds and the remainder 10% to short-term government bonds.
Buffett's Two Lists is a productivity, prioritisation and focusing approach where you write down your top 25 goals; circle your 5 highest priorities; then focus on those 5 while 'avoiding at all costs' doing anything on the remaining 20.
Jimmy Buffett's Biggest Billboard Hits: 'Margaritaville,' 'It's Five O'Clock Somewhere' & More. A recap of the legendary singer-songwriter's top-performing Hot 100 classics.
“We test the wisdom of retaining earnings by assessing whether retention, over time, delivers shareholders at least $1 of market value for each $1 retained.” This will assess whether management's capital allocation decisions are creating value for shareholders.
“Price is what you pay; value is what you get.” Buffett is probably the most famous practitioner of value investing, which involves buying stocks at a discount to their intrinsic value.
Rule No.
1 is never lose money.
Buffett's most commonly cited financial advice is as follows, “Rule №1: Never lose money. Rule №2: Never forget rule №1.” So, before investing, determine whether you can lose the money you're investing in.
The 90/10 investment rule is a rule of thumb for setting up your investment portfolio. The rule is relatively simple, advocating for splitting your portfolio, placing 90% of your assets into a low-cost S&P 500 index fund and the remaining 10% into short-term government bonds.
YOUR INVESTMENT PORTFOLIO
In this case, many investors will find that roughly 20% of their investment holdings will lead to about 80% of their growth. While these percentages won't be exact, the general rule applies that a small number of your investments will result in the most growth.
Coca-Cola: $24.3 billion (8.2% of invested assets)
Consumer staples goliath Coca-Cola (KO -1.04%) is the stock Buffett's company has held the longest (since 1988), and it's also considered a forever holding by the Oracle of Omaha.
The 5/25 rule's popularity came from a story about Warren Buffett having given Mike Flint, his pilot for 10 years, advice about his career priorities. The advice is to list out his top 25 career goals, and from those 25, encircle the top 5. Buffett then advised Flint to focus on these 5 and let go of the others.
In a 2017 Reddit Ask Me Anything post, Gates recounted how Buffett stayed at his house and had Oreos for breakfast. “He mostly eats hamburgers, ice cream, and Coke,” Gates wrote. “He may set a poor example for young people, but it's a diet that somehow works for him,” the Microsoft founder added.
Clear High-Interest Debt Possible As Soon As Possible
“I don't know how to make 18%, and if I owed any money at 18%, the first thing I'd do with any money I had would be to pay it off,” he said. “It's going to be way better than any investment idea.”
This investment strategy seeks total return through exposure to a diversified portfolio of primarily equity, and to a lesser extent, fixed income asset classes with a target allocation of 70% equities and 30% fixed income.
Fixed annuities are considered low-risk because they have a guaranteed minimum crediting rate for the term you select. That means that, as long as you keep your money in the account for the entire term, you know exactly what your return will be — you won't lose money.
Buffett recommends putting 90% in an S&P 500 index fund. He specifically identifies Vanguard's S&P 500 index fund. Vanguard offers both a mutual fund (VFIAX) and ETF (VOO) version of this fund. He recommends the other 10% of the portfolio go to a low cost index fund that invests in U.S. short term government bonds.