FAMOUS RULE, PRACTICAL MODEL
Warren Buffett’s 90/10 Rule: How to Model It in Excel
Turn a widely discussed allocation into an auditable spreadsheet. Calculate current weights, dollar targets, allocation drift and the trades required to return to 90% stocks and 10% short-term government bonds.
THE PRIMARY SOURCE
What is Warren Buffett’s 90/10 rule?
In Berkshire Hathaway’s 2013 shareholder letter, Buffett described instructions in his will for cash left to a trustee for his wife’s benefit. His allocation was simple: 10% in short-term government bonds and 90% in a very low-cost S&P 500 index fund. He suggested Vanguard for the index-fund portion.
“Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund.” Warren Buffett, Berkshire Hathaway 2013 shareholder letter
The statement is often shortened to “Buffett recommends 90/10.” That shorthand loses important detail: the passage concerns a specific trust, names particular asset categories and emphasizes low costs. It does not describe Berkshire Hathaway’s corporate portfolio or prove that 90/10 is appropriate for every household.
CONTEXT BEFORE CALCULATION
What the 90/10 rule does—and does not—decide
Define a two-asset target
The model provides a clear percentage target that can be measured and rebalanced.
Keep the implementation simple
One broad U.S. stock index allocation plus a smaller short-term government-bond allocation is straightforward to monitor.
Determine personal suitability
Goals, time horizon, cash-flow needs, taxes, jurisdiction and tolerance for losses still matter.
Remove concentration or market risk
A 90% U.S. equity allocation can experience substantial declines, and diversification cannot guarantee against loss.
EXCEL SETUP
Build a 90/10 portfolio model in seven columns
Start with two rows: one for the stock-index allocation and one for short-term government bonds. Keep current market values as inputs and let formulas calculate weights and gaps.
| Column | Field | Entry or formula in row 2 |
|---|---|---|
| A | Asset Class | Manual label |
| B | Current Value | Manual value from account records |
| C | Target Weight | 90% for stocks; 10% for bonds |
| D | Current Weight | =IFERROR(B2/SUM($B$2:$B$3),0) |
| E | Drift | =D2-C2 |
| F | Target Value | =SUM($B$2:$B$3)*C2 |
| G | Trade Needed | =F2-B2 |
Format columns C, D and E as percentages. Format B, F and G as currency. Use market values from the same date and in one base currency; mixing stale prices or unconverted currencies makes the result unreliable.
For a more general explanation of these calculations, see our guide to portfolio allocation drift in Excel.
WORKED EXAMPLE
A $100,000 portfolio that has drifted to 84/16
Assume the stock-index position is worth $84,000 and the short-term government-bond position is worth $16,000. There are no other assets in this simplified model.
At the 90/10 target, the model assigns $90,000 to stocks and $10,000 to bonds. Column G therefore shows +$6,000 for stocks and −$6,000 for bonds. Those are mathematical gaps before considering taxes, spreads, commissions or account restrictions.
FROM GAP TO DECISION
Model three rebalancing methods separately
Investor.gov describes several ways to return toward a target allocation. Your spreadsheet can compare them without treating the calculated trade as an instruction.
Sell and buy
Reduce the overweight asset and use the proceeds for the underweight asset. This may create transaction costs or tax consequences.
Add new cash
Direct contributions toward the underweight asset. If the contribution is too small, it may reduce drift without restoring the exact target.
Redirect ongoing contributions
Change future contribution percentages until the portfolio approaches its target, while tracking how long the process takes.
Add a tolerance band
A spreadsheet can flag drift without prescribing a universal threshold. Put a chosen tolerance in cell J2, such as a percentage-point value supported by your written plan, and use:
=IF(ABS(E2)>$J$2,"Review","Within band")The word Review is deliberate. It prompts a check rather than an automatic transaction.
LOOK BEYOND THE PIE CHART
Stress-test the 90/10 allocation before adopting it
Loss capacity
Model a severe stock decline and ask whether near-term spending would force sales at an unfavorable time.
Time horizon
Compare the allocation with the date when the money may be needed, not only the investor’s age.
Geographic exposure
The named stock component is an S&P 500 index fund. Decide whether a U.S.-only stock allocation matches the written plan.
Bond definition
“Short-term government bonds” is more specific than a generic bond fund. Record maturity profile, currency and credit exposure accurately.
Costs and taxes
Include fund expenses, trading costs and potential tax effects when comparing implementation choices.
Behavior under stress
A model only works if the investor can follow it during large market moves without abandoning the plan impulsively.
Track the current allocation over time rather than replacing history after every rebalance. Our broader guide to tracking an investment portfolio in Excel explains how to separate holdings, transactions, income and cash flows.
READY-MADE TRACKER
Monitor ETF allocation and portfolio drift
You can build the two-row model yourself. For a broader fund portfolio, compare it with the current ETF & Index Fund Tracker and verify its features against your needs.
Ultimate ETF & Index Fund Tracker for Google Sheets & Excel
The current product page describes transaction tracking, allocation analysis, portfolio drift and multi-currency tools. Review the live page for current inclusions and compatibility.
View ETF & Index Fund TrackerCurrent product requirements specify Microsoft 365 for Excel or a Google account for Google Sheets. Desktop or laptop use is recommended; mobile editing may be limited. This product is not affiliated with or endorsed by Warren Buffett, Berkshire Hathaway, Vanguard or S&P Global.
Compare all Investment Portfolio TrackersFAQ
Questions about Buffett’s 90/10 rule
What is Warren Buffett’s 90/10 rule?
It refers to instructions Buffett described for a trust benefiting his wife: 90% in a very low-cost S&P 500 index fund and 10% in short-term government bonds.
Does Warren Buffett recommend 90/10 for everyone?
No universal recommendation appears in the cited passage. It describes a specific trust instruction. Personal goals, time horizon, risk tolerance, taxes and cash needs can make a different allocation more appropriate.
How do I calculate a 90/10 portfolio in Excel?
Multiply total portfolio value by 90% for the stock target and by 10% for the bond target. Subtract each current value from its target value to calculate the dollar gap.
How often should a 90/10 portfolio be rebalanced?
There is no universal interval in the cited rule. An investor can define a calendar review, a tolerance band or a contribution-based method in a written plan, while considering costs and taxes.
Is a 90/10 portfolio low risk?
No. With 90% allocated to stocks, its value can decline substantially during equity-market downturns. The 10% bond allocation does not eliminate market, inflation, interest-rate or behavioral risk.
Is the 90/10 model the same as Buffett’s personal portfolio?
No. The passage describes instructions for a trust benefiting his wife. It should not be presented as a complete description of Buffett’s personal assets or Berkshire Hathaway’s holdings.
Sources and further reading
- Berkshire Hathaway: 2013 shareholder letter
- Investor.gov: Asset allocation, diversification and rebalancing
- Investor.gov: Diversify your investments
- Microsoft Support: Create and format an Excel table
Sources and product details checked September 2026. S&P 500 and all other trademarks mentioned belong to their respective owners.
