Download equity allocation template to plan your financial goals

If you are worried about how much to invest in equity for different financial goals, here is a simple asset allocation template that you use to plan your goals along with several video guides. Investing starts and ends with the right asset allocation or how much should I invest in equity and how much in fixed income. Should I invest gold and should I invest in real estate?

Asset allocation is not a fixed ratio. It has to be reduced in a step-wise manner, regardless of equity returns well before the goal deadline. You can use the freefincal robo advisory software template to create a start to finish financial plan with a variable asset allocation (all features are available in the free version but assumptions can be changed only in the pro version). The asset allocation template available in this article is for beginners to understand the basics of asset allocation and rebalancing.

Resources to back up assumptions

  1. There is no need to invest in gold. Should gold be part of your long-term investment portfolio?
  2. There is no place of real estate in investing. Five reasons why I will never invest in real estate (see video version below)
  3. Avoid equity exposure for monthly required in the next 5 years. Keep it minimum between 5-10 years and not more than 60% above that. How much equity should I hold in my portfolio? (see video version below)
  4. Why we need to gradually pull out of equity investments well before we need the money!

How to use the asset allocation template

Shown below is the screenshot of the template. Col A shows the years after which money is needed. Each row refers to a different goal (see the video for details). Cols B to E show the assumed asset allocation for different asset classes. All numbers are variable. Cols F to I show the assumed return after tax. Finally, col J gives the weighted average portfolio return (see the sheet for the formula)

Asset Allocation Template Screenshot

Yes, these are quite conservative numbers, but that I what I would recommend to most retail investors for a start. You can, of course, change this if you wish. The more important way you can use the sheet is for variable asset allocation. Imagine that you have a 13-year goal. After one year it becomes a 12-year goal and after one more year an 11-year goal. So with time, you will be going up this table. So the asset allocation will change and can be changed as shown here or as per the Freefincal Robo Advisory Software Template.

Thus you can use the template to fix the initial asset allocation and how it will change in subsequent years. After that, you can simply find out the investment amount for retirement or other goals See videos below. Remember as you go from one year to another, the portfolio should be rebalanced. See: How to Rebalance Your Investment Portfolio

What is portfolio construction and management?

How to use the template video version

What is portfolio rebalancing?

Why no real estate investments?

How much equity should I hold?

How to reduce risk in the portfolio?

==> Download the Asset Allocation Template <==

 

Additional steps after downloading

 

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Updated: March 16, 2019 — 9:15 am

The Author

M. Pattabiraman

This article is authored by M. Pattabiraman. He is the co-author of two books: You can be rich too with goal based investing and Gamechanger. He is a patron and co-founder of "Fee-only India" an organisation to promote unbiased, commission-free investment advice “Pattu” as he is popularly known, publishes research, analysis and holistic money management advice at freefincal.com which serves more than one million readers a year. Frefincal.com has more than a 100 free calculators on different aspects of insurance and investment analysis, including a robo advisory template for use by beginners.

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