What is the 70 20 10 investment model?

Okay, so you’re wondering about this “70/20/10 investment model,” huh? I get it, it sounds kinda complicated, but it’s actually a pretty neat way to think about your investments. Basically, it’s all about not putting all your eggs in one basket. You know, like that saying my grandma always used to repeat!

The idea is to split up your money into different buckets, based on how risky they are. So, imagine three piles:

• 70% goes into the “safe zone.” Think things like bonds, or even just a high-yield savings account. Stuff that’s not gonna make you rich overnight, but you’re pretty sure you’re not gonna lose a ton of money either. I remember when I first started investing, I was so scared of losing anything! So, I put a big chunk in bonds. Kinda boring, I admit, but it helped me sleep at night.
• 20% goes into the “medium risk” area. This might be something like index funds – they basically track the whole market, so you get a little piece of everything. It’s a bit more exciting than bonds, but still not crazy risky, you know? I mean, the market goes up and down, sure, but historically it tends to go up over the long haul, right?
• And then, 10% gets to go wild! This is for the high-risk stuff, like individual stocks. Maybe you think a certain company is gonna be the next big thing, and you wanna take a chance. Or maybe you just like the thrill of the gamble. I confess, I’ve definitely played around with this part. I bought some shares in a tech company a few years ago. Did it pay off? Eh, not really. (Lesson learned!). But that’s the point – it’s only 10% of your portfolio, so even if you lose it all, it’s not the end of the world.

So, in a nutshell, the 70/20/10 model is all about trying to find that sweet spot. It’s about having a solid base of safe investments, while still giving yourself a chance to make some bigger gains. And hey, it’s not a perfect system, and everyone’s different, right? But it’s a good starting point for thinking about how to diversify your investments and balance risk and reward. What do you think? Does it sound like something you might try?