Quick Read
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Berkshire held $377.4 billion in cash and Treasury bills at Sep 30 against $335.5 billion of stocks, 31.1% of its market value; it was still a net buyer of $11.2 billion of stocks this year.
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Buffett's rules in his own letters: a cash floor against calamity (now $30 billion) and 'the great majority of your money remains in equities.'
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For a couple with $2.4 million drawing $68,400 a year, the floor is five years of withdrawals, $342,000 in Treasury bills inside the IRA at 4.17%, with the other $2,058,000 in the index fund.
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Warren Buffett's Berkshire Hathaway now holds more cash than stocks. The third-quarter report posted Saturday shows $377.4 billion in cash and Treasury bills at the end of September against $335.5 billion of stocks, a gap of $41.9 billion. Even after netting out $20.5 billion of bills bought in September and paid for in October, the pile is $356.9 billion, still bigger than the stock portfolio. The $377 billion is 28.9% of everything Berkshire owns and 31.1% of what the company was worth at Friday's close.
That number lands on a bad week. The S&P 500 fund closed at $733.00 on Thursday, down 4.4% in a day, and Friday's $735.29 sits 5.6% under the Oct 6 record of $779.09. When the most patient investor alive is sitting on a record pile of cash, you may wonder how much of your own money belongs there. Gary, 67, and Linda, 64, are wondering. They retired with $2.4 million: $1.7 million in a rollover IRA, $500,000 in a brokerage account and $200,000 in a Roth. Social Security pays them $4,300 a month, $51,600 a year. They spend $120,000, so $68,400 a year comes out of savings, a 2.85% withdrawal rate.
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The direct answer for them: about $342,000, five years of what they draw, held in Treasury bills inside the IRA, with everything else left in a low-cost stock index fund. That is 14% in bills and 86% in stocks. Buffett's own words explain why a household's number sits so far below Berkshire's 31%.
The two rules Buffett wrote down
The first is a floor. In his 2018 letter Buffett called part of the cash "untouchable, having pledged to always hold at least $20 billion in cash equivalents to guard against external calamities," and added, "I will never risk getting caught short of cash." The new 10-Q sets the line at $30 billion: buybacks stop below it.
The second rule puts a ceiling on what the cash means. In his 2024 letter, written when the pile was already drawing comment, Buffett said: "Despite what some commentators currently view as an extraordinary cash position at Berkshire, the great majority of your money remains in equities. That preference won't change." He went further: "Berkshire will never prefer ownership of cash-equivalent assets over the ownership of good businesses." Those equities include BNSF, the utilities, Geico and dozens of businesses Berkshire owns outright.
The report backs him up. Over the first nine months of 2026 Berkshire bought $41.8 billion of stocks and sold $30.6 billion, a net buyer by $11.2 billion. Greg Abel, chief executive since January, spent a record $9.6 billion buying back Berkshire's own shares in the quarter, $14.4 billion for the year. The cash grew by $4.1 billion in nine months, from $373.3 billion at the end of 2025, and it earns interest while it waits: about $15.7 billion a year at the current 4.17% three-month bill rate.
Why Berkshire's 31% is the wrong number for your household
Berkshire holds cash for reasons you never will. It carries $178.5 billion of insurance float, money owed to policyholders that it must be able to pay after a hurricane. It wants to buy whole companies when prices fall, and it pays cash. And it has no spending to fund: Berkshire pays no dividend and draws nothing from the pile to live on.
Your cash has one job. For Gary and Linda it pays the $5,700 a month that Social Security does not cover, so that a bad year never forces them to sell the index fund at the bottom. The size of that reserve is set by how many years of withdrawals you want covered, and nothing else.
Four cash levels for $2.4 million
| Cash level |
in bills |
in stocks |
years of withdrawals |
interest at 4.17% |
Thursday's 4.4% drop |
|---|---|---|---|---|---|
| Buffett's 10% (his instruction for his wife's money) |
$240,000 |
$2,160,000 |
3.5 |
$10,008 |
$95,238 |
| Three years of withdrawals |
$205,200 |
$2,194,800 |
3.0 |
$8,557 |
$96,773 |
| Five years of withdrawals |
$342,000 |
$2,058,000 |
5.0 |
$14,261 |
$90,741 |
| Berkshire's 31.1% |
$746,400 |
$1,653,600 |
10.9 |
$31,125 |
$72,910 |
Five years is the fit for this couple. With the bills paying 4.17%, $342,000 funds 5.5 years of withdrawals, which would have outlasted the 65-month wait from the October 2007 peak to the March 2013 recovery, the longest of the last three bear markets. The interest alone, $14,261 a year, pays 21% of the gap. Thursday's drop cost the $2,058,000 stock side $90,741, and it sits $115,700 under the Oct 6 record. Nothing about that requires a sale, because the next five years of withdrawals are already in bills.
Berkshire's 31.1% would put $746,400 in bills, 10.9 years of withdrawals and $404,400 more out of the market than the five-year floor needs. Buffett's 10%, the instruction in his 2013 letter for the trust that will hold his wife's money, is 3.5 years here. It is thin for a couple drawing 2.85% a year, and it would have run out in the 2007 crash.
Where to hold it
The $68,400 comes out of the IRA each year, so the floor belongs there: $342,000 is 20.1% of the $1.7 million IRA. Buy a ladder of Treasury bills, 4 weeks to 52 weeks, through your brokerage's Treasury window, or hold a Treasury-only money market fund. Inside the IRA the interest is untaxed until you withdraw it, and every withdrawal is ordinary income whatever earned it, so the state-tax break on bills is worth nothing there. If you hold the floor in a taxable account instead, the $14,261 is federal ordinary income, $3,138 of tax in the 22% bracket, and exempt from state and local income tax, as TreasuryDirect spells out.
The $200,000 Roth stays entirely in the index fund. It is the last money they will touch and the only account where growth is never taxed. The $500,000 brokerage account stays in the fund as well, where its dividends are taxed at 15% rather than as ordinary income.
Refilling is the part most retirees skip. Each year the index fund ends above its previous high, sell one year of withdrawals, $68,400, from the stock side and move it into bills. In a year like this one, spend from the bills and leave the fund alone. You never have to decide whether Thursday was the bottom.
Where this is weak
Berkshire's figures are as of Sep 30. The $15.7 billion of interest is an estimate at today's bill rate. Berkshire's insurance investment income fell 14% from a year earlier, a reminder that bill yields move, so treat the floor as safety and the interest as a bonus.
The 65-month wait is on prices only; with dividends the recovery came sooner, so five years is on the cautious side. Taxes on the $68,400 are left out: it is IRA money, so the couple's spendable amount is smaller than the withdrawal. Linda's Social Security and the $120,000 of spending are illustrative, so plug in your own gap. Gary's first required withdrawal comes at 73, in 2032, and the same bill ladder is where you would take it from.
The bottom line
Berkshire holds more cash than stocks, and Buffett's own letters say what the pile is: a floor against calamity and money for the next purchase, with the great majority of the company kept in equities. For Gary and Linda the floor is five years of the $68,400 they draw, $342,000 in Treasury bills inside the IRA, earning about $14,261 a year, with the other $2,058,000 in the index fund. Thursday's 4.4% drop cost that stock side $90,741 and changed nothing about the plan. Copy Buffett's rule: enough cash that you are never a forced seller, and every other dollar in stocks. The percentage is his alone.
Learn 7 Ways To Generate Income With A $1,000,000+ Portfolio
If you've saved over $1,000,000, this guide is for you. The last thing you want in retirement is to run out of money, you want your money to generate lasting income while you enjoy your life.
Now you can learn the strategies wealthy retirees use to fund their retirement with The Definitive Guide to Retirement Income from Fisher Investments. Download the guide today! (sponsor)
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