Ideal allocation of money

 This is not a financial advice, however based on my experience - if given a choice, I would like to breakdown total worth of money in the following high level six categories. 

1. 25% in Real Estate (including the house you stay)
2. 20% in Retirement Funds (401K, IRA etc)
3. 20% in Stocks
4. 20% in Cash Flow Business
5. 10% in Cash
6. 5% in Commodities

Real Estate - has the slowest rate of return (in developed countries), but also one of the most stable and risk free asset class. Hence the maximum allocation, but it grows painfully slowly and it is hard to sell in the time of need - or it takes time to sell so should limit it to 25%. 

People spend on an average more than half of their saved money in their last 10-15 years due to deteriorating health condition. Hence - its best to give second best allocation to retirement funds. As you age, it is also hard to find work or produce money. Plus these money has advantage on tax, so 20% allocation in 401K, IRA etc makes total sense. 

You should always have 6 to 12 month of your expenses saved in hard cash. Yes, you can use credit card etc if you need the money when you lose job, but it comes with the price of interest and hence saved money in the time of need is very much a necessity. After you saved 12 month of expense in cash - you can start putting that cash in some reliable source of safety, such as fixed deposits in bank (as good as cash), savings account or bonds or Dividend Paying stocks (which does not move a lot but gives 8 to 10% Dividend on monthly basis such as QYLD, RYLD (subject to market risk). 

5% in Commodities to cover up the inflation over the period of time. Before Crypto currency, most of these were Gold and Silver money, but now a days, it is best to allocate 1 to 3% of commodity allocation in either BitCoin or Ethereum. 

All of above methods would give roughly 5 to 10% return over the period of time. It is best to generate additional income through investing in cash flow generating businesses. Often - initially it is best to partner with like minded friends or relatives which gives 15-20% Return. 

Lastly, the riskiest asset class - Stock Market. There is no other asset class which will give you the craziest sounding returns like stock market. 10,000$ invested in Amazon or Netflix over the period of 30 years, would give you 20+ Million dollars. However it is hard to find great stocks out of 8000+ and it is also hard to keep them for longer duration. Imagine investing 10,000$ in Amazon and not selling it when it reached 1 million dollar. Also at times it is frustrating - Imagine investing in Apple company from 1982 and waiting for 20 years and wake up in 2002 to see you have lost 1000$ out of 10,000$ and if you sell it, only to see in next 20 years, that same 10,000$ giving 10 million dollars. So, there are countless such examples - but if you get it right, no other asset class will reward you like stock market. Your first 10,000$ though - best to invest it in exchange traded funds like SPY or QQQ and later on once you have spend enough time and acquired enough knowledge about the various businesses - buy the individual stocks. "Invest in you" is often the most rewarding strategy such as if you are shopping in COSTCO or buying Nike Shoes or purchasing Apple phone etc- so invest in the companies whose products or services you are familiar with and use it on daily or monthly or yearly basis.