12:20:80 Investment Formula: As Gold Prices Hit Record Highs, Mix Precious Metals And Stocks For Maximum Returns

12:20:80 Investment Formula: Gold in the Indian market reached its all-time high today and people who invested benefited from it. Investing in stocks is and will be in fashion, but nowadays investors are also looking for other options and investing in raw materials is a good option.

The 12:20:80 formula is one in which investors can diversify their portfolio and invest in both stocks and gold. In the formula 12:20:80 there are three stages:

Stage 1 – 12 (months): Creation of an emergency fund

Every investor should make sure they have a contingency plan, and the creation of an emergency fund equal to a year’s expenses should be one of the components of the plan. It is also the first investment criterion.

An emergency fund is a financial safety net for future mishaps and/or unexpected expenses. This should stay liquid so that it can be easily removed. The ideal place to save is in the savings account. One can look for a savings account that offers a high interest rate with no minimum balance requirements or hefty fees to park your emergency funds.

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Stage 2 – 20 (percent): invest in gold

Gold reaching a lifetime high today is proof that the precious metal can also be a good choice for investors. According to the formula, one must use 20 percent of his investment for gold funds. Gold not only helps investors gain much-needed diversification, but is also beneficial due to the risk-reducing and return-enhancing characteristics of gold. Investors may want to consider gold ETFs or gold fund of funds for a profitable and liquid investment.

Stage 3 – 80 (percent): Invest in stocks

The remaining 80 percent of the investment can be placed in stocks in a diversified stock portfolio that has the potential to help you achieve your long-term financial goals. Within equities, investors need to ensure that their portfolio is not biased towards a particular sector or style.

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