one mroe thing
diversify your moneis something on these lines, percentages might varry, depedning on how agressive or defenisve you want to play
1) Into liquid ( banks, TRDs, COIs, divident stocks, Mutul funds ) or non liquid stocks property, growth stocks etc
1) short term, medium term long term holdings
this diversification gives you multiple advantages, and help you withstand shocks in a much better shape
sources of generating funds can be set in place liek this
1) your regular income which is your salary / business / services / rentals etc etc...ideally your home expense ( food , education medication ) should be covered by your regualr income..hence no pressure on other sources, and you can do masti with a freee mind.
2) your regualr income from predictable, stable 2nd srouce...TDRs, COIs, money marekt mutul funds, divident income....that gives you a stable 12-16 % returns with very very low risk to capital
3)Capital Gains or trading incomes from stock markets...which when # 1 & # 2 are in place, gets a automatic boost, due to saftey nets in place.
apart from the secuirty feature, # 1 & # 2 gives you setady source in income which you can regualrly ploug into stocks, every month, to accumulate shares at diffrne tprices, let you avergae out your buys...and never be out of cash for more than 20-25 days at max...
this is apart from the regualr up n down in stocks you do, to gain profits.....hence, to summarise, having a 25-45 % weight in money market fund gives your stocks trading multple level of boosts in
1) providing a saftey cushion in worst case scenario
2)you know you have extra funds, and wud not be on the road if kse exploded
3) you can take much mroe agressive stance in stocks, once you have your back covered by mutul funds
4)a monthly income from funds, you can trasnfer to kse, so you wud never be out of cash for more than 25-30 days at max.
5) regualar cash gives you sane buying, with better rates due to avergaing out effect
6) availability of liquid funds in case you need for any emergency need / good bulk buying for a chance entry in stocks.
7)tax ebnefits of mutul funds give you an excellent return..10-12 % return+ 15-20% tax arbirtage for held to 2 years measn 7.5 to 10 % p.a....acucmulated return on mutul fund for a salruied class is 17.5 to 22% combined..which is a decent return.....plus the above mentioned benefits are icing on teh cake
Edited by fasee, 08 September 2012 - 03:19 PM.