You can change your life Forever with this- The 80/20 Rule

You can change your life with this- The 80/20 Rule

Also known as the Pareto Principle, describes the unevenness in the distribution of various elements in the society. It is a statistical distribution which states that 80% of any result is an outcome of 20% of the total observations. The 80-20 rule is a widely used concept in business, finance, and personal expenditure.

The 80-20 rule was established by French economist Vilfredo Pareto.
Pareto used the principle to explain the distribution of wealth in Italy.
In a garden, Pareto observed that 80% of the pea pods produced by 20% of the entire crops. He later went on to explain how this principle also worked in the distribution of wealth in the economy. The Pareto principle later spread to different fields such as management and financing.

As a stock market trader, it is quite common to realize that only a small amount of profits or losses influence any portfolio. It means that 20% of the holdings of an investor account for 80% of the portfolio growth. However, due to the uncertainties in the stock market, it is difficult to apply the rule in real time.

For Example

80% Sales volume = 20% Selected Products
80% Company productions = 20% employees effort

Bottom Line

The application of this 80/20 rule is to identify productive efforts. Again, its nowhere advised that one should completely ignore the rest 80%.

2 thoughts on “You can change your life Forever with this- The 80/20 Rule

  1. As per shown about the 80/20 criteria, we get to realise that this principle helps a lot towards the financers and the stock market company…….this principle really works in our personal life too… per we have always heard that put efforts then you will get the results…..this is what its been shown in this article… vilfredo pareto
    One should put a best effort of 20% and you will see result 80% and this 20% should be enough strong so you could get an output of about 80%.This theory really works in finance,buisness and personal expenditures.As per shown in the article the work all around is totally 100% but the thing is that,in this 100%:- 20% should be efforts and rest 80 would be result……so all over its all about putting efforts maybe its small or big efforts.

Leave a Comment