Rajen's Moneytips: FINANCIAL TIPS FOR THE RESPONSIBLE HOUSEHOLDER

FINANCIAL TIPS FOR THE RESPONSIBLE HOUSEHOLDER

· Investment in the middle age is the most complex of all.

· When financial goals are added, they increase the complexity of planning required.

· It is much easier to plan when there are a small number of clearly defined goals.

2. Rule number zero - Compartmentalization

· Each type of goal is a separate entity and requires a different approach to investment.

· Each goal is characterized by an amount, a time frame and an acceptable risk level.

· These three factors are the guides for what kind of investments are ideal for that goal.

3. Time frame

· The most important characteristic of a financial goal is the time frame.

· To achieve your financial goals, exiting an investment is just as important as choosing one.

· The time frame decides what kind of asset allocation is best suited for meeting that goal.

4. Asset allocation

· Asset allocation simply means how much of your money is in equity, debt, and cash.

· Equity assets offer the highest potential returns and growth prospects, although they are also the most volatile over shorter periods.

· Debt assets offer stability, but lesser returns and no growth potential.

· Cash offers insurance for emergencies, but with no returns.

5. Menu

· At this stage of your life, choose investments from: