Majority of Warren's advice makes a lot of sense to me, however in this case a 4%-5% return might not be good enough to support someone who does not have a lot to invest in the first place. The 90-10 rule can only be applicable when the principal to be invested is enormous. As the principal decreases the amount of risk should increase to achieve better results. I would still say that any blue chip stocks would always out perform govt short term bonds on a year to year basis. Hence, although Buffet's advice might hold true for the big guns, for us small time investors blue chips are our investment to rely on.
Majority of Warren's advice makes a lot of sense to me, however in this case a 4%-5% return might not be good enough to support someone who does not have a lot to invest in the first place. The 90-10 rule can only be applicable when the principal to be invested is enormous. As the principal decreases the amount of risk should increase to achieve better results. I would still say that any blue chip stocks would always out perform govt short term bonds on a year to year basis. Hence, although Buffet's advice might hold true for the big guns, for us small time investors blue chips are our investment to rely on.