1. One has to just have a sound investment strategy which means that one is to have a sensible asset allocation across stocks, bonds & cash reserves.
2. A formula exists for money distribution exists by asking 2 simple questions to oneself and these are as stated below:
(a) My personal risk appetite
(b) Time span available for investment.
3. We will now cnsider the casce of a person of 25 years age and thus it would be prudent for him to have a higher allocation towards stocks and lesser towards other means of investment as the individual can take more risk as age is on his side. Similarily a retiring guy should have more income in fixed deposit as he has less risk taking ability.
4. The best thumb rule for investment in percentage in stocks is 100-age is the result which should be in equity and balance in fixed instrument.
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