The percentage is depending on your risk tolerance. The more risk you can take without emotionally troubled then you can invest in higher portion of your money in higher risk elements.

Basically the best advice is ... sell down your risky instruments and convert to FD until you can have a good night's sleep without thinking of your investment. Then you know you are at the right risk tolerance.

You got it all wrong about passive income.

There are two stages for investment, accumulation and distribution.

During the accumulation, you are to take the passive income and capital gains to be reinvested FULLY for it to compound. Compound interest as Einstein said it is the 8th wonder of the world. This means all passive income and other gains from selling should be used as opportunity fund to purchase more investment to raise your total accumulated wealth. These passive income is not for spending otherwise you will not be able to compound your gains. Typically during this period depending on your investment horizon you would be in more risky investments. Typical ratio will be 50% to 80% stocks/UT, the rest in fixed income.

During the distribution, you are to convert your accumulated wealth generated during the accumulation stage and convert to yield investments, where you will be now time to enjoy your hard work and draw down your investments as cost of living. At these time your passive income will be most useful to you to spend and not for accumulate more wealth. Typically at these time you would want to be invested in safer securities with lower fluctuations. Typical ratio will be 0%-30% stocks/UT and majority in fixed income.

For most people, once the accumulation stage enable them to go to the distribution stage, they they can finally retire and stop working and enjoy their passive income. This is what we call financial freedom. Of course all of it depends on the risk profile as I have mentioned above.

This post has been edited by gark: Jul 5 2013, 12:49 PM

Ya this is correct. always reinvest your dividend, interest etc...during accumulation stage. Let it snowball.......

This post has been edited by gark: Jul 5 2013, 03:42 PM

Distribution or enjoying your passive income comes after you have achieve financial freedom. Financial freedom means, you are free to do whatever you want in life and not worry about money as it will come automatically...

Get rid of debt before you think of savings. You save in ASB you get 8% dividend, yet you are paying much more interest rate. Is it worth it?

1. With your 9k, first settle your credit card debt (item 2). This is the highest interest so it make sense to do so 1st.
2. If possible withdraw your ASB to settle the rest of your CC debt (item 2) and balance conversion debt (item 3).
3. With your remaining monthly extra money settle item 2 & 3 until complete.
4. Then tackle the PL debt. The reason is not to pay off the PL, is because the interest is already calculated upfront, so settling it will not result in interest savings.
5. Once all debt are cleared, you may resume putting back money in ASB.

This post has been edited by gark: Jul 9 2013, 11:58 AM