Managing your hard earned money in US

Recently one of my friends came to me for advise on how to invest the sudden fortune he had inherited. Please find the link below for basics of investments by David Swenson, the fund manager for Yale university: http://oyc.yale.edu/transcript/1075/econ-252-11

As mentioned in the course, 90% of the variability of returns in institutional portfolios had to do with the asset allocation. So the first step is the most important step in the investment process, how much to invest in each asset category. Major asset classes, my recommended allocations and specific investments are:
Cash should be six times one's monthly salary to manage contingencies. It can be invested in either in a high interest rate savings account or a liquid debt fund. This should be one's first investment and till this is met, one should not invest anywhere else.
Bonds is the second most important investment. Bonds are a good hedge against any personal debt. They are also a good source of steady income and diversify risk from equities. It should form (age -10)% of total wealth plus personal debt. The bonds should be selected based on tax status and investment horizon. A "long term tax exempt in-state municipal bonds fund" is good for high salaried young individuals in high income tax states.
Real Estate should be lower of the two, "cost of your house" or "30% of the total wealth."
Equity is a great source of returns in the long run and should form the rest of the portfolio

Lets take an example of 30 year old Rick. He is a salaried individual earning $20K per month salary and has a house that costed him $500K. To finance his house, he took a $400K fixed rate home loan. More recently, he inherited $800K and is looking to invest.
His total wealth is $100K equity in the house and $800K cash. And he has a debt of $400K, he should either repay his debt with the extra cash or invest an equivalent amount in a debt fund to be able to repay his debt in all conditions. After this, he is left with $400K in cash.
6 times his salary $20Kx6 = $120K in cash in savings account. After this he is left with $280K
$280K*20% = $56K in Bonds
He already owns a house and thus further exposure to real estate is not needed
Remaining $280K-$56K = $224K in equities
Thus, as per my strategy, from $800K, he should invest $120K in cash, $456K in Bonds and $224K in equities.

While choosing funds keep in mind expense ratio, tax implications, bid ask spread, tracking errors and overall size of the fund.