Download equity allocation template to plan your financial goals

Last Updated on

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?

What is asset allocation?

How to use the template video version

How much should I invest in equity and how much in fixed income? Asset Allocation 101

What is portfolio rebalancing?

Portfolio rebalancing: simple examples with benefits

What is portfolio rebalancing?

Why no real estate investments?

8 reasons to never invest in real estate!

How much equity should I hold?

How much equity should I hold in my portfolio?

How to reduce risk in the portfolio?

How to reduce risk in an investment portfolio

==> Download the Asset Allocation Template <==

 

Additional steps after downloading

How to invest for our child's future: Simple tips

Do not trust retirement calculators? Then DIY with this retirement planning guide!

 

Do share if you found this useful

Create a "from start to finish" financial plan with this unique open-source robo advisory software template


 Don't like ads but want to support the site? Subscribe to the ad-free newsletter! 
You will get the full post-ad-free delivered to your inbox for Rs. 3000 a year. Follow this link to read the terms and sign up! 


About the Author M Pattabiraman author of freefincal.comM. Pattabiraman is the co-author of two books: You can be rich too with goal based investing and Gamechanger. “Pattu” as he is popularly known, publishes unbiased, promotion-free research, analysis and holistic money management advice. Freefincal serves more than one million readers a year with numbers based analysis on topical issues and has more than a 100 free calculators on different aspects of insurance and investment analysis, including a robo advisory template for use by beginners. Contact information: freefincal {at} Gmail {dot} com He conducts free money management sessions for corporates (see details below). Previous engagements include World Bank, RBI, BHEL, Asian Paints.

Content Policy

Freefincal has original unbiased, conflict-of-interest-free,  topical reports, reviews, commentary and analysis on all aspects of personal finance like mutual funds, stocks, insurance etc. All guest authors and contributors to the site also do not have any conflict of interest. If you find the content useful, please consider supporting us by (1) sharing our articles and (2) disabling ad-blockers for our site if you are using one. No promotional content We do not accept sponsored posts and link exchange requests from content writers and agencies. This is our privacy policy Our website is non-profit in nature. The revenue from the advertisement will only be used for hosting charges, domain registration charges, specific plugins necessary for traffic growth and analytics services for search engine optimisation.
Want to conduct a sales-free "basics of money management" session in your office?
I conduct free seminars to employees or societies. Only the very basics and getting-started steps are discussed (no scary math):For example: How to define financial goals, how to save tax with a clear goal in mind; How to use a credit card for maximum benefit; When to buy a house; How to start investing; where to invest; how to invest for and after retirement etc. depending on the audience. If you are interested, you can contact me: freefincal [at] Gmail [dot] com. I can do the talk via conferencing software, so there is no cost for your company. If you want me to travel, you need to cover my airfare (I live in Chennai)

Connect with us on social media


Do check out my books


You Can Be Rich Too with Goal-Based Investing

You can be rich too with goal based investingMy first book is meant to help you ask the right questions, seek the right answers and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now.  It is also available in Kindle format.
Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You WantGamechanger: Forget Start-ups, Join Corporate and Still Live the Rich Life you wantMy second book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at low cost! Get it or gift it to a young earner

The ultimate guide to travel by Pranav Surya

Travel-Training-Kit-Cover This is a deep dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, how travelling slowly is better financially and psychologically with links to the web pages and hand-holding at every step.  Get the pdf for ₹199 (instant download)

Free Apps for your Android Phone

All calculators from our book, “You can be Rich Too” are now available on Google Play!
Install Financial Freedom App! (Google Play Store)
Install Freefincal Retirement Planner App! (Google Play Store)
Find out if you have enough to say "FU" to your employer (Google Play Store)

Blog Comment Policy

Your thoughts are vital to the health of this blog and are the driving force behind the analysis and calculators that you see here. We welcome criticism and differing opinions. I will do my very best to respond to all comments asap. Please do not include hyperlinks or email ids in the comment body. Such comments will be moderated and I reserve the right to delete the entire comment or remove the links before approving them.

Leave a Reply

Your email address will not be published. Required fields are marked *