2 Colorful ‘Periodic Tables’ of Asset Allocation – Useful Visualizers for Financial Goal Planning

One of the most important concepts in financial planning is Asset Allocation. And without doubt I can say that, majority of people don’t get it right. That is the reason, these people end up with inadequate funds, when the goal-date arrives. And that is inspite of having saved and invested diligently, for years.
I have been pouring over books, online resources and talking to many*, who have managed their finances well and have achieved majority (or all) of their financial goals. One thing, which is common across all financially successful people* and theoretical case studies, is the efficient use of a deep understanding of Time Horizons, to make smarter investments decisions.
* Actual people in real-life.

Asset Allocation Financial Planning

Now there is a clear link between your financial goals and your time horizons. Though I will write more about this linkage in a detailed post soon, I will share with you a Periodic Table for funding your financial goals. The original idea of the grid can be found here. I have adopted the model and used my understanding and risk appetite to customize it.
Beware: The grids below might not be applicable for everyone. Not everyone is comfortable investing 100% in equity linked instruments even decades before the goal. So go through this grid with that in mind.
Here is the first grid which deals with asset allocation for retirement planning:
Retirement Planning Asset Allocation
As I said above also, a person might not have the risk appetite to invest 100% in equities. Also, most planners suggest getting out of equities near retirement. I disagree with all of them. If planned properly, one can leave a significant part of corpus in equities, even after retirement and still do well. But that is once again dependent on one’s risk profile (moderately high in my case). You will see ‘X’s in last two columns – I am not suggesting any fixed combination of assets here – as its too far into the future to do any concrete, water-tight planning right now (assuming one is planning for a 25 year old, then we are talking about 55 years ahead!). So you can safely ignore the last two columns.
But as a personal thing, I will prefer to keep 30% in equities, even when I am old and ofcourse, my essential expenses are taken care off.
I know there might be many issues with such a thumb-rule kind of a grid. As already mentioned, it might not be applicable for everyone.
Here is another grid about non-retirement goals. Goals which have a fixed date and don’t require any money once the goal is achieved.
Financial Goal Planning Asset Allocation
What I would suggest is that you pick up a pen and paper, and create a similar grid for yourself. It’s a nice exercise to help you think through, how you want to achieve your financial goals. Since it’s only a small theoretical exercise, you don’t run the risk of losing any money here. 🙂

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