For beginners interested in savings and investing, a simple set of recommendation,
First define your Short Term (ST), Medium Term(MT) and Long Term(LT) Objectives.
Examples of ST objectives could be Contingency Fund for no job expenses (1.5 to 2 year expense) or health care expense (apart from insurance)
Examples of MT objectives could be down-payment of flat/house expense, fund for purchasing car
Examples of LT objectives could be retirement fund, higher education or marriage for your kid.
Below is how you can divide your investment/savings.
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Monitor this portfolio on quarterly basis.
The below approach is objective based.
For ST objective such as building contingency fund for no job expenses (1.5 to 2 year expense) and health care expense (apart from medical insurance). What ever figure u have in mind for achieving these, that is the amount you need to collect under short term.
So as per this approach, this (meeting ST objectives) will have the highest allocation until the funds required to meet this objective is met.
Once the above objective is met, then the allocation to this objective will reduce and fund allocation for collecting funds for meeting medium term objectives will increase.
Once the fund contemplated for medium term objectives are met, then fund allocation for long term objective will increase.
To illustrate, after all mandatory expenses in the month are met (mandatory non discretionary expense include house rent, bills, etc) say you are left with INR 100.. So initially when you want to meet ST fund accumulation, INR 60 should go to ST, INR 20 to MT, INR 10 to LT and INR 10 to discretionary expenses.
You can tweak this as per your convenience..
Once ST objective is complete... Then we have to re-balance this for MT and so on and so forth.
