1. Our net surplus savings are our total earnings minus our total expenditure.
2. Through structured spending, we would regularly save enough money to achieve our financial goals in life, that is retirement, education and marriage of children, house, holidays, etc., while adequately covering risks.
3. Our mandatory expenses can be classified into rent, power, phone, clothing, education, household help, transport, and food bills, which should be regulated by setting their targets, to increase your wealth-building ability.
4. Other such expenses are an EMI for a car or home loan, and tax liability.
5. Then are the discretionary expenses, like entertainment that can be controlled and reduced through tough decisions, as they carry a heavy emotional quotient, by fixing it as a percentage of regular income.
5. The strategy requires a trade-off between gains and pains across a timeline.
6. Then are the unexpected expenses that can be managed efficiently with insurance, like for life, health and home, by paying a small premium today for averting them tomorrow.
7. Whatever is left on a monthly basis should be earmarked towards investment products, which are broadly of 2 types:-
a) those that will offer growth in value - to beat inflation, but earn a limited income, like equity, real estate, gold; and
b) those that will offer a regular income - to meet daily expenses, but not grow in value to beat inflation, like deposits, bonds, post office saving schemes, ppf, epf, etc.
8. An asset allocation, where a portion is in growth assets and another portion is in income assets, will be the ideal strategy as compounding of invested amount will fight inflation, and utilization of the corpus over time will meet monthly income needs.
9. A strategic portfolio could, therefore, be defined as one that runs at an average rate, with a lower maximum downside, perpetually, as the amount withdrawn in the initial years would be too small to impact the corpus that grows in value, taking advantage of its exposure to the growth assets, and once capital appreciation is achieved over a period, the portfolio funds the withdrawals, fights inflation and leaves behind a legacy too.
10. Strategic investing is easy to implement if we figure out what is important and what can be compromised - without greed in either !
2. Through structured spending, we would regularly save enough money to achieve our financial goals in life, that is retirement, education and marriage of children, house, holidays, etc., while adequately covering risks.
3. Our mandatory expenses can be classified into rent, power, phone, clothing, education, household help, transport, and food bills, which should be regulated by setting their targets, to increase your wealth-building ability.
4. Other such expenses are an EMI for a car or home loan, and tax liability.
5. Then are the discretionary expenses, like entertainment that can be controlled and reduced through tough decisions, as they carry a heavy emotional quotient, by fixing it as a percentage of regular income.
5. The strategy requires a trade-off between gains and pains across a timeline.
6. Then are the unexpected expenses that can be managed efficiently with insurance, like for life, health and home, by paying a small premium today for averting them tomorrow.
7. Whatever is left on a monthly basis should be earmarked towards investment products, which are broadly of 2 types:-
a) those that will offer growth in value - to beat inflation, but earn a limited income, like equity, real estate, gold; and
b) those that will offer a regular income - to meet daily expenses, but not grow in value to beat inflation, like deposits, bonds, post office saving schemes, ppf, epf, etc.
8. An asset allocation, where a portion is in growth assets and another portion is in income assets, will be the ideal strategy as compounding of invested amount will fight inflation, and utilization of the corpus over time will meet monthly income needs.
9. A strategic portfolio could, therefore, be defined as one that runs at an average rate, with a lower maximum downside, perpetually, as the amount withdrawn in the initial years would be too small to impact the corpus that grows in value, taking advantage of its exposure to the growth assets, and once capital appreciation is achieved over a period, the portfolio funds the withdrawals, fights inflation and leaves behind a legacy too.
10. Strategic investing is easy to implement if we figure out what is important and what can be compromised - without greed in either !