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.”

What Is a 70/30 Portfolio? A 70/30 portfolio is an investment portfolio where 70% of investment capital is allocated to stocks and 30% to fixed-income securities, primarily bonds.

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.

The Buffett Rule is the basic principle that no household making over $1 million annually should pay a smaller share of their income in taxes than middle-class families pay. Warren Buffett has famously stated that he pays a lower tax rate than his secretary, but as this report documents this situation is not uncommon.

His early life set the foundation for his future achievements. By age 21, Buffett's net worth was nearly $20,000, and by 26, it had grown to $140,000. By age 30, his net worth had grown to $1 million, a significant sum compared to the average family income in the U.S. at that time, which was around $5,600 per year​​.

What is the rule of 69 in investing? ›

The Rule of 69 is a simple calculation to estimate the time needed for an investment to double if you know the interest rate and if the interest is compounded. For example, if a real estate investor earns twenty percent on an investment, they divide 69 by the 20 percent return and add 0.35 to the result.

Among his various tips and tricks, lies Buffett's golden rule. And it's pretty straight forward: “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.

His biggest weakness is the disadvantages of his strength. He is pretty strict and he doesn't really listen. His opinion are often right, but some don't end up right. When he goes down a track that doesn't make sense, he does not pay attention to anything, which is a weakness for a big business leader like him.

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.

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.