Ever heard of the 80\/20 rule? It suggests 80% of an outcome is often the result of just 20% of the effort you put into it.<\/p>\n\n\n\n
This doesn\u2019t always work. Sometimes, it\u2019s worth going the extra mile. But often, by prioritizing the 20% of your efforts that makes the biggest splash, you can reduce excess commotion. In that spirit, here are 4 financial best practices that pack a lot of value per \u201cpound.\u201d<\/p>\n\n\n\n
1. Investing: Be There, and Stay There<\/strong> \u201c80% of success is showing up.\u201d<\/strong><\/p>\n\n\n\n Going back to 1926 and after adjusting for inflation, U.S. stocks have delivered about 7.3% annualized returns to investors who have simply been there, earning what the markets have to offer over the long haul. Those who instead fixate on dodging in and out of hot and cold markets are expected to reduce, rather than improve their end returns. That\u2019s because, when markets recover from a downturn, they often more than make up for the stumble quickly, dramatically, and without warning. Instead of chasing trends, simply stay invested over time.<\/p>\n\n\n\n 2. Portfolio Management: Use Asset Allocation, and Don\u2019t Monkey With the Mix<\/strong> Both practical and academic analyses have found that asset allocation is responsible for a great deal of the return variability across and among different portfolios. So, to build an efficient portfolio, we advise paying the most attention to your overall asset allocation, rather than fussing over particular securities. And by the way, once you\u2019ve got a personalized asset allocation in place, the only reason to change it is if you change. If you\u2019re tempted to alter your allocations based on current market conditions, circle back to our first point.<\/p>\n\n\n\n 3. Financial Planning: Do It, But Don\u2019t Overdo It<\/strong> Here\u2019s some good, 80\/20 news: Your plan need not be elaborate or time-consuming to be effective. If you\u2019d like to do more, great. But even a basic plan made in conjunction with an Azzad advisor will give you a huge head start. When in doubt, read what you\u2019ve written. Is it still \u201cyou\u201d? If so, your work is done; stick to plan. If not, consider what\u2019s changed, and update your plan accordingly with your advisor. It can be that easy.<\/p>\n\n\n\n Building Lifetime Wealth, 80\/20 Style<\/strong><\/p>\n\n\n\n Properly applied, the 80\/20 rule can help minimize the time and energy you have to put into maximizing your financial well-being. Whether you\u2019re saving for retirement, funding your kids\u2019 college education, preparing for a wealth transfer, applying for insurance, or otherwise managing your hard-earned wealth, we can help you identify and execute these and other actions that matter the most, so you can get back to the rest of your life. Want to learn more? Give us a call today. Consider it part of the 20% of your efforts that should take you far.<\/p>\n","protected":false},"excerpt":{"rendered":" Ever heard of the 80\/20 rule? It suggests 80% of an outcome is often the result of just 20% of the effort you put into it. This doesn\u2019t always work. Sometimes, it\u2019s worth going the extra mile. But often, by prioritizing the 20% of your efforts that makes the biggest splash, you can reduce excess […]<\/p>\n","protected":false},"author":1,"featured_media":21473,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"footnotes":""},"categories":[9,733],"tags":[],"class_list":["post-21469","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog","category-financial-planning"],"_links":{"self":[{"href":"https:\/\/intelliserver.net\/wordpress\/wp-json\/wp\/v2\/posts\/21469","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/intelliserver.net\/wordpress\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/intelliserver.net\/wordpress\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/intelliserver.net\/wordpress\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/intelliserver.net\/wordpress\/wp-json\/wp\/v2\/comments?post=21469"}],"version-history":[{"count":1,"href":"https:\/\/intelliserver.net\/wordpress\/wp-json\/wp\/v2\/posts\/21469\/revisions"}],"predecessor-version":[{"id":21470,"href":"https:\/\/intelliserver.net\/wordpress\/wp-json\/wp\/v2\/posts\/21469\/revisions\/21470"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/intelliserver.net\/wordpress\/wp-json\/wp\/v2\/media\/21473"}],"wp:attachment":[{"href":"https:\/\/intelliserver.net\/wordpress\/wp-json\/wp\/v2\/media?parent=21469"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/intelliserver.net\/wordpress\/wp-json\/wp\/v2\/categories?post=21469"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/intelliserver.net\/wordpress\/wp-json\/wp\/v2\/tags?post=21469"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
You could do far worse than to invest according to a sentiment attributed to Woody Allen:<\/p>\n\n\n\n
Asset allocation is about investing in appropriate percentages of security types, or asset classes, based on their risk\/return \u201cpersonality.\u201d For example, given your financial goals and risk tolerances, what ratio of stocks versus bonds should you hold? What percentage of small value stocks versus large growth? How much domestic and how much international?<\/p>\n\n\n\n
Also in 80\/20 rule fashion, an ounce of financial planning can alleviate pounds of doubt. It connects your resources with your values and priorities. It\u2019s your touchstone when uncertainty eats away at your resolve. It guides how and why you\u2019re investing to begin with.<\/p>\n\n\n\n