Case Study: Financial Portfolio

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As you know, in the recent past, I posted about an ideal portfolio for a 25 to 38 age group person.

Ideal Portfolio:

50% Assets
30% Aggressive Investments
10% Consevative Savings
5% Commodities
5% Savings for Emergency

Insurance is not part of the ideal portfolio. However, insurance is mandatory for a person who has dependants.

Case Study:

I was evaluating my friend 's portfolio and here is what he has, as of today - Name: Suraj(changed for privacy).

Suraj's Asset Allocation:

55% real estate
36% insurance
8% liquid
6% Automobiles
2% commodities

Improvement points for Suraj's portfolio:

His problem is - He does not have emergency funds and he always falls back on credit cards, which is not healthy in terms of personal finance.

An ideal portfolio says a person with dependant should have 10 times his annual gross income. Suraj has way too much insurance coverage for his salary.

Equity in the portfolio is completely missing. One of the best ways to fight inflation in long-term is to have equity items added to the portfolio.

One more improvement Suraj has to do is to increase emergency fund. Emergency fund is supposed to be 3 to 6 months - monthly expenses for the family.