Savings rate and investment allocation rate
Hi folks,
We, as a family of two, roughly save 50-60% of our salaries every month. Amongst the savings, 95% goes to equity mutual funds (index). We don’t have any other hard asset and stay on rent in a tier 1 Indian city hardly without any EMI and planning to expand the family soon.
I was wondering,
- how are we doing in terms of personal finance, and,
- what are the typical savings rate and equity (or other asset) investment allocation rate for others?
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You might have to diversify your investment portfolio with some small percentage in safer investments like FDs.
If you haven't already, create an emergency fund that's worth 6 -12 months of expenses and keep that in your savings account. How much is your TC and networth?
Why to keep 6-12 months worth of money in Saving Bank account!! One should put in FD, multiple small ones, which can be broken if needed.
Why are you able to save only 50-60%? I am assuming both persons work, if even then you are able to save only 50-60%, then it looks a bit less.
You haven’t told whether you have pre-existing FD/Cash or not. If no cash/fd, put 1 yr worth of expenses in FD.
Also, keep saving 20% towards lumpsum expenses like travelling etc. Post that you can save the rest in equity. Everything in equity is too risky.
Thanks for the advice!
Yeah, I agree the savings rate is a bit less. Both of us are early stage of our careers, between 1-3 YoE. And then we live in the most expensive city in India.
Seems perfect to me. What are your long term goals?
No goal as such, apart from being financially independent. Short term goal is to generate as much alpha as I can.
95% to equity seems to risky to me. I have about 70% in equity and 25% in debt and 5% in Bitcoin
What app do you use for bitcoin trading? I too am planning to buy a few crypto.
take out some money (probably 4-6 months of your expenses) and put it in an FD just for emergencies
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Thank you