Charlie Munger once talked about Warren Buffett's '20-slot' rule on successful investing. Here's how it works.

• Charlie Munger talked about Warren Buffett's "20-slot" rule in a commencement speech in 1994.
• The rule says you should treat your lifetime investments as 20 punches on a 20-slot punch card.

The passing of Charlie Munger on Tuesday has prompted investors to look back on his past guidance, including a piece of advice he shared nearly 30 years ago.

In a 1994 commencement speech at the University of Southern California, Warren Buffett's right hand man at Berkshire Hathaway spoke about the "20-slot" rule. It's an investing — and life — strategy used by Buffett himself.

According to Munger, Buffett loved sharing this rule while lecturing at business schools. He would start off by telling MBA students that he could improve their financial well-being by giving them a 20-slot punch card, with each punch representing all the investments you make for the rest of your life.

After you punched through the card, you couldn't make any more investments. Munger said that Buffett believed, "Under those rules, you'd really think carefully about what you did and you'd be forced to load up on what you'd really thought about. So you'd do so much better."

He added that while the concept seems "perfectly obvious" to him and Buffett, it's not conventional wisdom and not widely taught.

"To me, it's obvious that the winner has to bet very selectively. It's been obvious to me since very early in life. I don't know why it's not obvious to very many other people," Munger continued.

For his part, Buffett told MBA students in a 1998 lecture at the University of Florida that they shouldn't assume they will get 20 great ideas in their lifetime. Out of those 20, maybe three, five or seven will work out.

"But what you can't do is get rich by trying one new idea every day," he said.