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The origin of Poole quadrant
The Poole Quadrant chart divides family assets into four categories according to the use of funds, namely, the money to be spent, the money to save lives, the money to generate wealth and the money to preserve capital and appreciate. The proportions of the four categories of assets are 10%, 20%, 30% and 40% respectively.

The money to be spent refers to the daily expenses, including food, clothing, housing and entertainment. It is necessary to reserve 3-6 months of living expenses, so that even if the expenses unexpectedly increase or the income suddenly stops, the normal life of the family can be guaranteed in the short term.

Life-saving money mainly refers to the cost of insurance protection. Now major diseases come quickly. Once a major disease occurs, the cost is often huge. Therefore, smart families always plan ahead and buy enough critical illness insurance and accident insurance for their families in advance to avoid falling into the predicament of returning to poverty due to illness.

Money to make money refers to the money used for investment, mainly for the purpose of obtaining income, and obtaining higher income by taking risks, such as stocks, real estate, futures, foreign exchange and other investment forms.

Capital preservation and appreciation refers to money that pursues steady appreciation. This kind of fund has a clear purpose in the future and can't lose money, but it needs to preserve capital and increase value in the short term. This kind of fund has low risk tolerance, and it is better to increase its value moderately under the premise of safety.

Poole Quadrant Diagram tells us that assets need classified management. The deeper you know about the purpose and allocation objectives of each kind of assets, the more helpful it will be for you to do a good job in asset allocation.