Both personal finance and family finance pay attention to the principle of not putting eggs in one basket. Therefore, it is crucial for financial managers to grasp the proportion of financial management. Let’s get to know several proportional distribution techniques in financial planning:
1. 10 laws of insurance
Insurance is a necessity for families, but there is always such a phenomenon: either too much money has been spent on insurance, or the amount of insurance is not enough. How much insurance should be purchased and how much premium is appropriate? Very simple, remember two 10s: the insurance limit is 10 times the family’s annual income, and the total premium expenditure is 10% of the family’s annual income
2. Invest in no more than 30 stocks
Although it is not possible to put eggs in one basket, too many baskets are not conducive to wealth accumulation. If you want to get a higher return, it is best to buy no more than 30 stocks. Because a combination of more than 30 stocks, the average return is basically the same as the market. , It’s better to buy a cheaper and no-brainer index fund
3. The proportion of stock investment
The appropriate proportion of stock investment=100-age/100 risk is proportional to reward. For a 30-year-old young man who pursues growth, the proportion of appropriate investment in stocks is 70% (100-30/100); for a 70-year-old retiree, Stock investment should not exceed 30% (100-70/100). This rule is recommended by foreign textbooks. In China, we should change 100 to the average age of life in society, such as 80 or 75.
4. 72 rules of value-added calculation
The well-known rule of 72: do not get the interest back, make a profit, and the time required to double the principal value. The formula is: the time required to double the principal (years) = 72÷annual rate of return (%) for example , If you deposit 100,000 yuan in the bank, the annual interest rate is 2%, and the annual profit rolls out. It takes 36 years to double the principal; if 100,000 yuan is invested in an open-end fund with an annual return rate of 12%, it will take about 6 years to change Into 200,000 yuan
5. Mortgage 1/3 income rule
How much mortgage can a family afford in a month? From the point of view of the bank’s review of the mortgage line, the monthly mortgage is usually not more than one-third of the household’s income as an important reference for the loan line.
6. 6-month living expenses of current deposit
The interest on demand deposits is very small. If you save too much, it’s wasted. If you don’t save too much, you’re afraid of not enough. Family emergency. Generally speaking, demand deposits are the most suitable for individuals or families for 6 months of living expenses.
7. Financial assets 1:1 fixed assets
The ratio of household financial assets (deposit funds, stocks, bonds, etc.) to fixed assets (real estate, auto shops, etc.) is preferably 1:1