»The Honest Truth by Ajit Dayal

The 36-24-36 portfolio with a 56-inch chest!
5 MAY 2020

Humans are attracted by figures.

Most men believed that a perfect woman was someone with physical dimension of the 36-24-36 "classic". This worked for a generation of male-chauvinists, but not anymore.

With the acceptance that women are equally talented and equally smart (if not smarter!) than men, the perceptions of the "perfect women" has evolved into a perception of accomplishment and partnership. The male definition of a perfect woman has shifted.

For women, the definition of a perfect man has also evolved. The Greek-God, chiselled look has given way to a more realistic - but still solid - look. As an aside, I fail that test. On the physical side, I am a shade over 5' 9" and my waist should be 45% of my height, at 32 inches (it's not and has not been for some years!), my shoulders should be 1.6x my weight (nowhere close!), my arms and neck at 15 inches (the neck yes, the arms nowhere close!) and the chest should be 10 inches large than the waist at 32 inches (I doubt I make that, too!).

With the need for more family-life balance and shared responsibility of men for raising children the definition of a perfect man has also shifted.

Portfolio for all seasons.

My earliest memory of money is helping my father, a doctor, count the notes that he gave to my mother for her daily shopping. I must have been 10 years old then. There were no credit cards and debit cards and e-wallets, then. I also remember counting the old 1 paise, 2 paise and 5 paise coins when I was playing flush (teen patti) with my family. Putting the coins in heaps (when I won) and trying to calculate how much the person across from my side of the bed had in their winning pile when I was losing.

I visited the old Bombay Stock Exchange building in 1977 to buy my first shares (I lost money) and learn about FERA and the RBI (SEBI was not even conceptualised then) and the bargain sales available from IPO of companies such as Hindustan Lever, Colgate, and Remington Rand.

During the demonetisation of the Rs. 1,000 notes in January 1978 by the Janata Dal government, I saw crates of money when I visited Zaveri Bazaar to see why people were in panic. When the Hunt brothers tried to corner the silver market in 1979, I went to silver shops and bought bars of silver with my savings. Gold had risen in price, too, but that was as a by-product of the silver binge.

Yes, over the past few decades, I have seen a fair number of bubbles and crashes - and survived them all. But, though conservative by nature - with the occasional wild bet with a very small amount of my capital - I was always keen to find a mix of "portfolio allocation" that would:

  1. Give me enough cushion to survive a downturn in the stock markets and the economy and a possible loss of job or salary,
  2. Leave me invested in the downturn without getting into a panic - and possibly give me the ability to add to my investment in stocks at the time when everyone else was in panic mode and clueless on what to do, and
  3. Give me some appreciation when my investment in stocks would be battered.

So, what is the portfolio mix which will let me find the equivalent of the perfect women - or where can a woman find the perfect man?


Under most circumstance, the 24-80-20 number would be an ugly, unattractive number.

Any dietician would warn you that you are about to explode and you need to get onto a crash-course of a diet to survive.

But the 24-8-20 is the secret to a successful, stress-free lifestyle even as the world is crumbling around you.

For a portfolio allocation, it is the secret sauce which has prevented me from being sunk by any financial meltdown.

And don't let the fund managers on TV fool you and mislead you: in the past 24 years, there have been 17 dislocations and meltdowns that have made many investors declare bankruptcy, many companies shut their factories, and many mutual funds decimate your savings.

My conservative approach has got me through the many cycles and led me to a better level of financial security as we emerge from every crisis.

Don't get me wrong: I have had my wild days.

I have bet on horses under the guidance of my late father, a doctor by profession, a saint by heart and a mathematician by neuron design.

I have played the lottery many times - and ended up tearing the tickets.

I have never played matka.

But I have played rummy, dabbled in bridge (my father represented India in 3 Bridge Olympiads) and played chess.

I have lived in Chapel Hill, Singapore, Jakarta, Hong Kong, New York, Palo Alto, London, Zurich and Fort Lauderdale - and, of course, Bombay and Mumbai.

And I have realised this one truth of financial planning:

It does not matter which country you live in.

It does not matter which currency you earn in.

It does not matter how much you earn.

What matters is how much you spend.

It takes time for the human mind to adjust to a change in spending habits.

Look at your own life: how much did you pay for a cup of coffee in 1980?

In 1990?

In 2000?

In 2010?

And today, in 2020?

What if I told you to drink the same coffee you were drinking in 1980 or 1990?

Your consumption of tea or coffee has changed over the decades - not just the price of the tea or coffee, or where you get the tea or coffee from, but even the flavour of the tea or coffee you now enjoy.

It took you decades to drift your consumption pattern upwards to the more refined.

It would be a huge shock to your system if you were out of a job in 2020 and had to drink the tea or coffee you drank in 1980.

It would be a shock to your family if you had to downsize your car from the one you have today to what you had in 1990.

Or to move to the smaller place you probably rented or owned in 2000.

Not only does it come as a shock to you and your family, but your friends may start feeling sorry for you because you failed and are slipping down. That should not bother you - but, somewhere in the back of our minds, it does.

Reducing the level of a lifestyle from what you are accustomed to is not easy.

The "24" that is the sacred core.

So, the first thing to do is to have enough money in the bank that can keep your consumption pattern chugging along for 12, 24 or 36 months.

My preferred number is 24 months to 36 months.

So, if I spend Rs. 1 lakh every month - I want to ensure that I have Rs. 24 lakh in very safe, very liquid investments.

This is what I have done:

  • Rs. 3 lakh in Savings Bank accounts (be careful which bank!), this represents 3 months of expenses;
  • Rs. 21 lakh in Quantum Liquid Fund (Rs. 12 lakh or 12 months of expenses) and Quantum Multi Asset Fund (Rs. 9 lakh or 9 months of expenses).

Table 1: Keeping my money for a rainy day so that I can still pay monthly expenses.

Fund AuM (Rs. crore) 10 year 5 year 3 year 1 year
Quantum Liquid (April 7, 2006) 254 7.46% 6.43% 6.08% 5.42%
Quantum Multi Asset Fund (July 11, 2004) 16 NA 7.29% 5.90% 4.24%
Note: Performance as of April 30, 2020; All returns are compounded annualized;
Source: PersonalFN.com; CRISL

Take the case of the COVID-19 crisis.

Many of us are unsure when we will start to work again.

Will our businesses survive? (Note: I know Quantum will because we built the same buffers in the businesses that have been built in my personal finances.)

Will our jobs still be there?

Will we earn less in 2020 than we did last year?

When will our incomes from our job, profession or business get back to normal?

If you had done the "24" it would not matter!

Think about it: what date did the lockdown begin? March 24, 2020.

When will a vaccine be ready? Maybe June 2021 - one year from now...

That is a 15 month time line from the day COVID hit us to the day we will be more comfortable to resume the economic activity of life before COVID.

With 24 months of expenses tucked away in the savings bank account, the Quantum Liquid Fund, or the Quantum Multi Asset Fund, I am not nervous.

No - there is no need to be...

I have 24 months of money easily accessible, capital in a safe place - I am comfortable.

I don't need to cut my expenses.

I don't need to change my lifestyle, or the kind of tea or coffee that I drink.

Future planning with the "80-20"

This brings me to another aspect of life: what we wish to consume or own in the future.

We all have desires and needs.

We need comfortable home to live in - even with COVID and because of COVID - we realise the need for more space. One does not need to be extravagant but, given the pressures of modern life "having more space" for those who live in crowded cities are important.

While our jobs, professions and businesses do give us incomes - which we need to maintain our monthly expenses - we need our savings to also work alongside us to attain the dream of sending the children to good universities.

This is where the "80-20" comes in handy.

So, let's rewind. I had kept Rs. 24 lakhs in the savings bank account and the Quantum Liquid Fund and the Quantum Multi Asset Fund. Let's say my total pool of money is Rs. 50 lakhs. This means I have Rs. 50 lakh - Rs. 24 lakh = Rs. 26 lakh to invest:

  • 80% in equity mutual funds, Rs. 20.8 lakh
  • 20% in gold, Rs. 5.2 lakh

Given that I helped create the Quantum Mutual Funds, I helped design products and solutions that would solve the needs of millions of people - including myself.

So, the Rs. 20.8 lakh in equity mutual funds can be invested in (a) the Quantum Equity Fund of Funds, Rs. 17.7 lakhs (85% - but you can make this 80% to 90%), and (b) the Quantum Long Term Equity Value Fund, Rs. 3.1 lakh (15%).

Finally, the "20" in the 24-80-20 formula: Rs. 5.2 lakh in the Quantum Gold Saving Fund.

Table 2: The 80-20 that needs to grow your wealth for future needs.

Fund with Inception Date/Benchmark AuM (Rs. crore) 10 year 5 year 3 year 1 year
Quantum Equity Fund of Funds (July 20, 2009) 36 8.90% 4.65%% -0.49%% -14.12%%
Quantum Long Term Equity Value (March 13, 2006) 581 8.07% 2.65% -4.41% -23.67%
Quantum Gold Savings Fund (May 18, 2011)     10.80% 16.47% 48.46%
Note: Performance as of April 30, 2020; All returns are compounded annualized;
Source: PersonalFN.com; CRISL

On a 1-year time horizon, the 80-20 is not doing well in the last few years because the collapse of stock markets has eroded much of the gain.

That is fine; I have a decades-long view on my investment in stock markets. Remember, there is 24 months of "safe" money to tide me over difficult times and wait out any downturn in stock markets.

Gold has appreciated, though, and made some part of my portfolio look good. It is insurance and protects the erosion of my wealth in situations like COVID.

Please remember, that I am not your financial planner or your financial advisor.

I don't know your specific needs, your incomes, and your situation.

But please consider using this as a base.

Change the suggested pattern and mix to suit your needs, your situation.

What I have described above are the principles of allocating your savings into simple investment buckets. This has worked form and guided me. It has allowed me to continue to live my life without having any tension over how I am supposed to meet my monthly known expenses.

There are many other problems in life that we have to deal with - but how and where to invest your money should not be a problem that keeps you awake at night.

Try this simple, easily-implementable solution as a base to build your own model.

It works for me: I can walk around as if I have a 56-inch chest!

Now you need to make it work for you.

Stay Blessed. Stay Healthy. And stay invested.