There are various avenues where one can invest money? These are called Asset Class. Following are the main asset classes:
- Debt: Fixed Deposits, Endowment Plans, PF, PPF, Guaranteed return avenues like Bonds
- Equity: Stocks, Mutual Funds
- Gold
- Property
Do you know what in what proportion one should invest money in various categories?
It is very simple.
Your age can be used to calculate percentage of distribution. How?
- Debt: Whatever is your age, you should keep that percentage in Debt. For example, if your age is 30 years, upto 30% of your investment should go in Debt fund.
- Equity: Average age of human life can be assumed 80 years. You can reduce your age from 80 to get exposure% in Equity. For example, if your age is 30 years, you should invest upto 50% (= 80- 30) in Equity.
- Gold: Gold has been beating inflation earlier, but not doing so recently. However Gold is the best bet in bad times. You can keep upto 10% of your investment in Gold.
- Rest 10% of your investment you can keep in other assets like Property etc.
Hope you find this simplified money mantra suitable?
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