For a Better Tomorrow, Follow the 24-80-20 Rule Today
Monday, Sep 07, 2020
As we all gradually come out of this Pandemic phase, we are finally hoping for life to get back to normal.
The past few months have changed the dynamics of our lives.
Along with personal revelations, the spread of the Pandemic has also taught us some very hard yet important financial lessons.
Let this crisis serve as a sign to always be financially prepared.
Today we offer some honest views.
Asset allocation plan that will not just help you sail through the financial crisis, but will empower you to build wealth.
Our founder, Ajit Dayal has shared his interesting asset allocation plan in one of our recent webinars.
He simply calls it '24-80-20'.
The 24-80-20 rule is his secret to a successful, stress-free lifestyle even as the world is crumbling around you.
Let us understand what these numbers '24-80-20' mean to you.
The Emergency No. 24
For any financial planning, to begin with, the first step is to create an emergency fund or a contingency fund as some of you may call it.
This is the foundation of your wealth creation journey.
Have enough money in your bank account or your liquid fund (that you have chosen wisely & that prioritizes the safety and liquidity over returns).
How much exactly would you ask?
Ajit's answer is monthly expenses for 24 months. That's 24 for you.
Sure, 24 is on a higher side. It's ideal.
But to begin with, you can keep expenses worth 6 -12 months as your emergency fund and keep building it gradually.
These expenses will take care of your household expenditure, help you pay off your utility bills etc.
What this money does for you?
It not only helps you during difficult times.
It does much more for you. It keeps you financially secure (and mentally too!) knowing you have surplus money kept away, which can suffice you for a while, in case you face any sort of emergency/crisis.
When you know consciously that you are financially protected, you are in a better position to deal with your life. You feel liberated.
It instils confidence to overcome any financial crisis. No matter what income bracket you fall into.
It also helps you inculcate a 'saver's mindset', rather than just spending cash frivolously.
A better tomorrow with 80-20
Post Covid impact, we are not sure when life again may ask us to face yet another crisis.
We don't know what is in store for us in the coming future.
But we do know what we want in this coming future.
The beauty of a human life is that, nothing can turn down our hopes and dreams. No crisis what so ever.
We will keep dreaming for our next holiday...whenever it is possible.
Our finances would have taken a jolt in the recent past but our financial goals haven't really changed.
This is where you need to focus on 80-20.
a) 80% of your money in an equity oriented mutual fund
b) 20% in gold mutual fund
It's that simple. It's all that you need.
Once you have you emergency fund kept aside, all you have to do is invest 80% of your money in equity oriented mutual funds (considering your long term financial goals).
This money will aim for achieving all your long term financial goals.
Your equity portfolio could be made of around 2 - 3 equity funds.
Remember, investing in too many funds could clutter your portfolio and dampen your potential returns.
The remaining 20% could be in gold. Gold is a universal diversifier and recently has also proved its potential to generate wealth especially during crisis situations.
We believe this strategy towards asset allocation makes investing easy and hassle free.
It will take care of your today. It will care of your tomorrow.
It worked for Ajit, it could work for you also.
At Quantum we always want you to live a stress free life and meet all your financial goals.
Together, let's make it happen....for a better tomorrow. 😊
Editor's Note: If you wish to further understand this 24-80-20 asset allocation plan, please feel free to write to us at [email protected] Or give us a missed call at +91-22-68293807 and we will call you back.
Disclaimer, Statutory Details & Risk Factors:
The views expressed here in this article / video are for general information and reading purpose only and do not constitute any guidelines and recommendations on any course of action to be followed by the reader. Quantum AMC / Quantum Mutual Fund is not guaranteeing / offering / communicating any indicative yield on investments made in the scheme(s). The views are not meant to serve as a professional guide / investment advice / intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or mutual fund units for the reader. The article has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and views given are fair and reasonable as on date. Readers of this article should rely on information/data arising out of their own investigations and advised to seek independent professional advice and arrive at an informed decision before making any investments.
Mutual fund investments are subject to market risks read all scheme related documents carefully.
Please visit – www.QuantumAMC.com to read scheme specific risk factors. Investors in the Scheme(s) are not being offered a guaranteed or assured rate of return and there can be no assurance that the schemes objective will be achieved and the NAV of the scheme(s) may go up and down depending upon the factors and forces affecting securities market. Investment in mutual fund units involves investment risk such as trading volumes, settlement risk, liquidity risk, default risk including possible loss of capital. Past performance of the sponsor / AMC / Mutual Fund does not indicate the future performance of the Scheme(s). Statutory Details: Quantum Mutual Fund (the Fund) has been constituted as a Trust under the Indian Trusts Act, 1882. Sponsor: Quantum Advisors Private Limited. (liability of Sponsor limited to Rs. 1,00,000/-) Trustee: Quantum Trustee Company Private Limited. Investment Manager: Quantum Asset Management Company Private Limited. The Sponsor, Trustee and Investment Manager are incorporated under the Companies Act, 1956.