Thursday, January 31, 2008

Personal Finance

The first month of the year is almost to it's end and I haven't organized my finances, needs updating my accounting of expenses, let alone my thoughts on how the goals would be met. One of the ways to manage my personal finance would be...

Part I.... Earned Income: spend less than we earn and invest the balance.

Asset Allocation: split balance into 3 parts, Reserve, Growth and Momentum. Based on age and aggressiveness.. the allocation will be different. I am more aggressive hence I am using 30% Reserved, 35% Momentum, 35% Growth model. Those who are more aggressive would probably settle for a 35/30/30 model.

Reserves: are for emergencies, unless it is a life and death situation, I must not touch it! Invest reserves into very low risk investments.

Growth: Are for midterm, low risk-low income to long term returns like real estate, business, etc.

Momentum: High risk-high reward and fast trading activities examples are forex, business, carry trade, stocks, options, etc

When I get my returns from Growth... I will split it into 3 portions and put 1/3 into Reserve, 1/3 into Growth and 1/3 into Momentum. When I get my returns from Momentum It would be split into 4 portions and put 1/4 into Reserve, 1/4 into growth, 1/4 into momentum and 1/4 into Dream.

Dream: Is for the reward on the hard work we've done.

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RISK WARNING: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. Before deciding to trade foreign exchange you should carefully consider your monetary objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your deposited funds and therefore you should not speculate with capital that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent advisor if you have any doubts. Past returns are not indicative of future results.
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