Buffett's Two Lists (2024)

FAQs

What is the Buffett 25 5 rule? ›

The rule is simple: identify the 25 most important things on your to-do list, prioritize them, and then focus on the top five items while ignoring the rest.

Warren Buffett once said, “The first rule of an investment is don't lose [money]. And the second rule of an investment is don't forget the first rule. And that's all the rules there are.”

The .The 70/30 rule is a guideline for managing money that says you should invest 70% of your money and save 30%. This rule is also known as the Warren Buffett Rule .The 30% of the 30/70 rule should be put towards savings and debt, although it can be divided into 20% and 10%.

A: Five rules drawn from Warren Buffett's wisdom for potentially building wealth include investing for the long term, staying informed, maintaining a competitive advantage, focusing on quality, and managing risk.

Buffett uses the average rate of return on equity and average retention ratio (1 - average payout ratio) to calculate the sustainable growth rate [ ROE * ( 1 - payout ratio)]. The sustainable growth rate is used to calculate the book value per share in year 10 [BVPS ((1 + sustainable growth rate )^10)].

Indeed, the Oracle of Omaha has said that he spends “five or six hours a day” reading books and newspapers. And while it may be difficult to set aside nearly a full work day's worth of hours to read, it recently got a little bit easier to consume information like Warren Buffett.

Buffett said he revises his will every three years, and he still advises his wife to allocate 10% of her inheritance to short-term government bonds and 90% to a low-cost S&P 500 index fund.

Warren Buffet has stated that he would never split the class-A shares of Berkshire Hathaway, even though they trade at almost $530,000 per share. His reasoning is that he wants to only attract long-term, high-quality buy-and-hold investors (like himself) and to discourage scalpers and day traders.

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.

Which Mix Is Right for You? If you're a younger investor with a long time horizon and are comfortable taking on more risk, the 80/20 portfolio may be a good fit. However, if you're closer to retirement or prefer a more conservative approach, the 60/40 portfolio may be a better option.

Is 80/20 aggressive? ›

Consider an aggressive investment example: A portfolio that is 80/20 would be considered aggressive as opposed to a portfolio that is 60/40, which would be considered conservative. An 80/20 portfolio invests 80% of the wealth in stocks and 20% in bonds. Whereas a 60/40 portfolio invests 60% in stocks and 40% in bonds.

1 – Never lose money. Let's kick it off with some timeless advice from legendary investor Warren Buffett, who said “Rule No. 1 is never lose money.

Billionaire investor Warren Buffett famously said: “The first rule of an investment is don't lose money. And the second rule is don't forget the first rule.” Being honest, I've never quite got it. Anybody who buys individual stocks surely has to accept they'll lose money at some point.

Warren Buffett eats McDonald's for breakfast, drinks 5 co*kes a day, and devours cookies and ice cream. Here are the investor's 11 best quotes about his iconic diet. Warren Buffett may be a billionaire businessman in his 90s, but he eats like a child.

The Origin of the 5/25 Rule

This productivity strategy is said to have originated from advice Buffett gave to his pilot, Mike Flint. The essence of the rule is not just about focusing on the top 5 goals but also about actively avoiding the remaining 20 goals until the priority ones are achieved.

First, Buffett told Flint to make a list of his top 25 career goals. Then, Buffett said to circle the top five goals. But here comes the interesting part. The idea is, to remain focused on accomplishing goals 1 through 5, you have to stay completely away from working on goals 6 through 25.

The 5/25 rule is a tool that you can use to prioritize your goals so that you can realistically focus your efforts and succeed. The rule says to narrow down a list of your top 25 goals to 5 that truly speaks to you. Keep a list of the other 20 goals as reminders that these goals are distractions from your true goal.