International Funding

In most financial textbooks, they advise diversifying your funds into many different investment vehicles like bonds, stocks, mutual funds, money markets instruments as well as spreading your money across numerous different sectors and different countries to diversify your risks. To an average investor who has low financial competence and needs the wide diversification to lower risk, this makes sense. However, while this kind of broad diversification guarantees low risk, it also guarantees low returns of 5%-8%.

Don’t follow those strategies. Warren Buffett advises that ‘broad diversification is used by people to protect themselves against their own ignorance.’ If you know what you are doing (high financial intelligence), you should concentrate your portfolio into equities (stocks & mutual funds) as they achieve the highest return. And you can achieve low risk not by simply spreading your money around, but by your competence of knowing which funds and stocks to pick.

So, the strategy I am going to share with you would be deemed highly risky by the general financial advisers and bankers. Again, it’s because most investors lack the competence to do otherwise. However, with the strategies and knowledge you are gaining in this book, you will prove to yourself that it is actually low risk, high return strategy.

You should take your monthly savings of 15-20% and allocate it to four money baskets. These are the security basket, growth basket, high growth basket and the luxury basket. Let me explain each of these.
1. Security Basket (Target Return of 1.5%-4.5%pa)
This is for your own security. If you suddenly lose your job, experience a salary cut or suffer a setback in your business, you know that you will have access to these funds anytime to see you through.
It should include cash, fixed deposits/certificates of deposits, personal housing, insurance & capital guaranteed funds.

2. Growth Basket 1 (Target Return of 8.51%-20%pa)
This is the basket where you build your net worth & positive cash flow assets that will lead you to financial freedom.

3. Growth Basket 2 (15%-25%)
This is the basket where you ACCELERATE the building of your net worth & positive cash flow assets that will lead you to financial freedom. Once again, you should not have to touch this money for five to ten years to let the power of compounding work its magic.

4. Luxury Basket (0%)
This basket is for you to enjoy such as dream house, luxury cars, jewelry, and other luxuries.

Bank Bonds, capital guaranteed funds, Cash Saving, Extra Income, Financial Competence, Growth Basket, high financial intelligence, insurance, money baskets, Monthly Salary, mutual funds investment, personal housing, Return Of Investment, Savings Management, Security Basket, stock market, Valuable Investment

• Full Digests
• Digg
• Delicious
• Reddit
• Stumble