Money Ladder

I am currently reading a book titled
"The Story of Rich" .

Rich in this story is about a small business owner who successfully sold his small business for an 8-figure amount and is waiting to retire.

However with the amount of money coming to his hands, he is pondering how to plan for it.

This book is part parable, part-non-fiction and how-to book on personal finance.

There is a particular chapter where the author mentions about creating a money ladder.For instance, if you have $400,000 of savings, you might want to split them into 4 portions.

• First $100,000 is used as emergency cash and is placed in a fixed deposit account.
• The next $100,000 can be invested in high growth shares for greater yield
• The next $100,000 can be invested in dividend playing stocks
• Last $100,000 can be invested as an opportunity fund.

In this way, one can ensure that they have sufficient cash when they need to use in an emergency and not have to compromise on growth in a stock market.

I realized that this plan may work if you have lots of cash upfront but i am thinking of this works if you have limited funds like $40,000?

Here's how I would split the $40,000

• $10,000 in emergency funds
• $10,000 small companies and high growth stocks
• $10,000 dividend playing stocks like blue chips and REITs.
• $10,000 in bonds.

What do you think?
Is this type of assest allocation effective or only works for those with a large 'war chest'?

How to Save $100k in 7 Years

This is my first post in Blogger and I am inspired to create this blog after coming
across this article in the Straits Times, dated 7 July 2013 article.

In this article, it shows how a young fresh grad, just straight out of school can save $100,000 in 5 years.

This article also assumes that

• You save 50% of your take home pay
• You are single
• You have cheap hobbies

• You are willing to make some sacrifices.

However, this article does not take into account the various 'milestone' events that can thwart a youngster's 'best laid plans' such as

• Student loans
• Weddings
• Honey moons
• New house
• Any other 'catastrophic' events.

After reading this article, I am inspired to safe $100k within the next 7 years.
In the next 7 years, I will be 40 and this is the goal that I want to reach at 40.
I am also hoping that combined with investments, I can exceed this goal. 

This is what I aim to to

1) Save 30% -50% of my take-home pay
2) Invest 60% into REITs and dividend paying stocks.
3) Start a part-time venture

I am also looking for a tracking chart to track my progress.