What is the Buffett 90/10 portfolio?

90% in a low-cost S&P 500 index fund and 10% in short-term US government bonds, rebalanced yearly — the allocation Warren Buffett specified for his wife's trust.

Is the 90/10 portfolio a good idea?

For a very long horizon and a high tolerance for losses, it has historically delivered strong growth at rock-bottom cost. For anyone needing stability or near-term money, it is too aggressive.

Why only 10% in bonds?

Buffett's view is that over decades, cheap US stocks win, and the small cash slice exists only to cover spending needs during downturns without selling stocks at the bottom.

Does Warren Buffett's 90/10 portfolio work?

By Jeffrey Lin · Published 2026-08-24 · Updated 2026-08-24

The 90/10 portfolio is the instruction Warren Buffett left for the trust he set up for his wife: put 90% in a low-cost S&P 500 index fund and 10% in short-term government bonds. It is a deliberately aggressive, deliberately simple bet that, over a long horizon, cheap US stocks beat almost everything else.

From Nov 1991 to Jul 2026, a yearly-rebalanced Buffett 90/10 portfolio returned 10.2% per year with a maximum drawdown of -46.3% — versus 10.9% and -50.8% for S&P 500 (SPY) alone. It gave up some return for materially lower risk, producing a higher Sharpe ratio (0.81 vs 0.78). $10,000 grew to $293,948 (vs $358,798 in the S&P 500).

What's in it: the allocation

SPY90%
BIL10%

Growth of $10,000

Growth of a $10,000 investment, Nov 1991–Jul 2026. The Buffett 90/10 line rises more slowly than the S&P 500 but with visibly shallower dips — the trade-off the strategy is designed to make.

What an investor actually experiences: drawdowns

Decline from the prior peak — the "underwater" curve.

A drawdown is the stretch of time when your account is worth less than it was, with no way to know when it will recover. Buffett 90/10's worst decline was a severe -46.3% — almost as deep as the S&P 500's own -50.8%. How long the pain lasted matters just as much: it spent as long as 72 months (about 6.0 years) below a prior high, versus 74 months (6.2 years) for the S&P 500.

A fall of -46.3% is the kind that tests conviction. If you needed this money for a house, a child's tuition, or retirement during such a slump, you could be forced to sell near the bottom — which is why money you will need within a few years usually belongs somewhere less exposed than this.

Results

Statistic	S&P 500 (SPY)	Buffett 90/10
CAGR	10.9%	10.2%
Annualized volatility	14.7%	13.2%
Sharpe ratio	0.78	0.81
Sortino ratio	1.21	1.26
Max drawdown	-50.8%	-46.3%
Longest drawdown (months)	74	72
Growth of $10,000	$358,798	$293,948

Here is what those figures mean for a real saver. CAGR is the smoothed annual growth rate: at 10.2% a year, Buffett 90/10 turned $10,000 into $293,948 over about 35 years, versus $358,798 for the S&P 500. Volatility (13.2% vs 14.7%) is how much the ride bounces from year to year. The Sharpe and Sortino ratios measure return earned per unit of risk (higher is better). And the maximum drawdown — the deepest peak-to-trough fall — is the number that decides whether you can actually stay invested.

Over this particular window the diversification roughly broke even: Buffett 90/10 earned about the same risk-adjusted return as the S&P 500 (Sharpe 0.81 vs 0.78) while trailing on raw growth. Its case rests on protecting against risks — a prolonged US-stock slump, an inflation shock — that this stretch did not deliver.

Figures are computed from monthly adjusted closing prices over Nov 1991–Jul 2026. Drawdowns are measured at month-end and so understate intra-month extremes.

Methodology

The two instruments

SPY — SPDR S&P 500 ETF: The 500 largest US companies — the standard 'US stocks' holding.
BIL — SPDR 1-3 Month T-Bill ETF: Cash-like short-term Treasury bills — stability and dry powder.

Backtest parameters

Allocation: 90% SPY / 10% BIL
Benchmark: S&P 500 (SPY)
Data: Monthly adjusted closing prices (dividends reinvested)
Period: Nov 1991 – Jul 2026 (history before an ETF's inception is extended with its older index/mutual-fund equivalent)
Rebalance: Yearly, at month-end
Transaction costs: None modelled

Advantages

Maximum long-run growth: With 90% in US stocks, it captures nearly the full upside of the market, which has historically outrun more conservative mixes over long periods.
Radically simple and cheap: Two holdings, near-zero fees, and one yearly rebalance — almost nothing to manage or get wrong.

Disadvantages and risks

Brutal drawdowns: At 90% stocks, it falls almost as hard as an all-stock portfolio in a crash — the 10% cash barely cushions a bear market.
Only for long horizons and strong stomachs: Anyone who might need the money within a few years, or who would panic in a deep decline, is poorly served by this much stock.

Try it yourself

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Frequently asked questions

What is the Buffett 90/10 portfolio?: 90% in a low-cost S&P 500 index fund and 10% in short-term US government bonds, rebalanced yearly — the allocation Warren Buffett specified for his wife's trust.
Is the 90/10 portfolio a good idea?: For a very long horizon and a high tolerance for losses, it has historically delivered strong growth at rock-bottom cost. For anyone needing stability or near-term money, it is too aggressive.
Why only 10% in bonds?: Buffett's view is that over decades, cheap US stocks win, and the small cash slice exists only to cover spending needs during downturns without selling stocks at the bottom.

References

Educational analysis of historical data, not investment advice. Past performance does not guarantee future results. Backtested results are hypothetical and computed from the MarketHeist portfolio engine on the parameters above.