You can easily find that one perfect way to invest that could have grown your money 100x in hindsight. Making decisions doesn’t seem as straightforward when trying to invest looking at the future.

If you’re stuck, here is a fast three-step plan for your money:

#### 1. List your income & expenses

This one is fairly simple. List out the sums of money you make and spend every month. If you run a business and deal with uncertain numbers, come up with a conservative estimate.

The objective is to find how much freely allocable money is available each month.

#### 2. Create an emergency fund

It can get difficult to estimate how much money your emergency fund should have – a month’s expenses, ten months, two years? You don’t have to answer this question straight away. The bigger your emergency fund, the more financially secure you may feel.

Let’s start with a month’s expenses if you have nothing stashed away. The next goals can be ten months and then two years’ expenses. What if you’ve already hit that number? Ask yourself if more emergency money can incrementally help you feel secure. If yes, keep allocating more. If not, you’re completely set here.

You’re almost done.

#### 3. Invest Surplus Funds

This is the final step – allocate your money among different asset classes.

Again, to keep things simple, pick one instrument for taking exposure in each asset class. How do we decide the allocation percentage, though? Let’s use the 100 – age allocation thumb rule. If you’re 30 years old, the thumb rule says your equity exposure should be 70% [100 – 30]. We’re splitting the remaining 30% equally between fixed income, real estate and gold.

You can try to fine-tune this but an equal split works perfectly fine to reduce your risk.

Asset Class | Instrument | Exposure |
---|---|---|

Equity | Nifty ETFs | 70% |

Fixed Income | Provident Funds | 10% |

Real estate | REITs | 10% |

Gold | Sovereign Gold Bonds | 10% |

There are still some questions we need to answer. What makes the preferred instruments best to invest in the asset classes listed above? What about alternative assets like art or crypto? Perhaps, we’ll also need to figure out how to optimise the risk-reward.

More on this later. 🙂