The Most Authentic Guide on Personal Finance and Investments


Words of Wisdom : "No matter how great the talent or efforts, some things just take time. You can't produce a baby in one month by getting nine women pregnant." ~ Warren Buffett

Prosperity in Diversity

Indians are fanatic about cricket and so, let me use the game of cricket as an analogy to discuss the investment process called Asset Allocation.

You are the selector of the team that will play your financial matches. Your objective is to build a team [buy assets] that,
(a) will win matches [fulfill your needs and desires], 
(b) is consistent and 
(c) plays well across different pitches [different situations].

Logically, you will achieve this provided you have 
-  a well-diversified and
-  a balanced team of quality players

Extrapolating the analogy, your team [assets] should comprise of the following:

(A) Batsmen to Score Runs [Assets to Generate Returns]
1. Blue-chip Companies / Large-cap Funds 
2. Mid-cap Companies/ Mid-cap Funds
3. Balanced Funds
4. Property 
5. Gold / Gold ETFs
6. Bank FDs/Debt Funds/Post Office Schemes

(B) A Wicketkeeper who Saves Runs and also Bats [Assets that Save Tax and also Generate Returns]
7. PPF
8. ELSS

(C) All-rounder(s) who Bowl to Protect your Score and also Bat [Assets that Protect your Corpus and also Generate Returns]
9. ULIP (Unit Linked Insurance Plans)
10. Moneyback/Endowment Insurance Plans

(D) Bowlers to Protect your Score [Assets that Protect your Corpus]
11. Term Insurance 
12. Medical Insurance 
13. Assets insurance
14. Emergency Corpus

The bottom-line: Depending on the quality of the pitch [your circumstances], you have to choose the most appropriate eleven players time to time.  
...Know how you can achieve prosperity via diversity in my latest publication 'Your Guide to Finance and Investments'.

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