Gearing Up Your Financial Portfolio for Higher Returns

Hellen Fong YL
Smart Investors 'Women - What it takes to be Financially Free'


Take a typical 24-year old young woman with her new found independence that comes with entering the workforce which also means the start of financial responsibilities. Top priority would be to pay off car loan, education loan, manage credit card debts. Savings could be for future education plans, for example, an MBA or as startup capital for a business in future.

Asset allocation for the example above, assuming a moderate risk profile and investment horizon of 3 to 5 years, would typically comprise Cash 20%, Bond/Fixed Income 50%, Stocks 30%. On the other hand, the asset allocation for a 40 years old matured individual would be different.

Priority would focus on finances for children's education, medical/health and retirement. Assuming the same risk profile but a longer time horizon of say 5 to 10 years, the asset allocation may change to Cash 30%, Bonds/Fixed Income 40%, Stocks/Properties 30%. With early financial planning, retirement is time of peace and relaxation, free from financial burdens.

Earning money is only half the equation to achieve financial freedom. Effectively putting your money to work for you is equally important. How you manage your money today determines your future. That's why taking control of your finances is paramount.

There is no short cuts to building wealth. It commands consistent commitment over the long term. Just like going on a strict diet, self-discipline is key.


Stick to the following recipe and you would not go wrong in your quest to be financially free:

*Save at least one tenth of what you earn.
*Control spending and avoid unnecessary debt.
*Invest on a regular basis, regardless of whether the market is up or down.
*Start early and benefits from compound growth/interest.
*Protect what you have by deversifying your investments.
*Seek advise from a professional.
*Have an action plan and stick to it.