Sunday 10 December 2017

Future plan for allocation of earnings

When I started getting involved and interested in investing. I planned ahead in that if I were to start work, how much would I allocate each month and what growth rate am I aiming for the funds allocated for investing.

I have heard of the popular 50-30-20 allocation where 50% is for expenses, 20% for investments and savings (Financial goals) and 30% for wants and needs. I can tweak it a little to allocate it as such 50%=expenses, 30%=savings and 20%=investments. Its a simple and easy allocation plan to follow however I think I'll have to go more in-depth for example, money for my mother and also a more precise breakdown for the expenses portion.

For now, I am planning to allocate my funds this way however, after much thought, I realised that the 50-30-20% allocation of funds is better in a sense. This is because if I split my expenses too specifically, for example as seen above and in that month my travel/transport expenses burst, my funds will be too tight to allow any adjustment. This is due to fluctuations that happen every month hence if i do allocate funds too tightly, the fluctuations can cause stress or inappropriate usage of funds.

In this way, I will have $1120 to work with for my expenses like food, transport and allowances for my mum. I have set a low starting salary given the economy outlook and because my degree is from a private university hence explaining why I would most likely be starting with a lower than average starting pay. I do plan to continue to give tuition during the weekends after I have started work like maybe 2 sessions per week to supplement my expenses. We shall see what the future holds and hopefully I'll update again when I have started work.

With my investment of $448 per month and at a modest growth rate of 5% per annum, I would have $83,814.75 after 10 years. This is again a really simple calculation with a fixed amount used. Everything is in a 'in progress' state and I hope to definitely find out more and improve on it.

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