The Pareto Law as a solution for your personal finances

We know that for many people to have some personal finance “healthy” can be a very difficult task, but over the years, certain tools have emerged to facilitate this mission. Today we present you with one of them, called Pareto's Law.
Who was Pareto?

Vilfredo Pareto, of French-Italian origin, was an economist, sociologist, engineer and philosopher of the late 19th and early 20th centuries. Throughout his life Pareto stated many economic concepts, such as the balance of Pareto or the indifference curves.

But without a doubt, if we should highlight any of these economic concepts, this would be the famous Pareto's Law or 80-20 rule, based on their empirical knowledge.

What is the Pareto Law or the 80-20 rule?

Pareto he discovered this rule by observing his environment, in which he realized that his society was naturally divided by the “few of a lot” and “the many of little”. Concretely, Pareto observed this question in the distribution of land in Italy, in this scenario he observed how 80% of the ownership of the land belonged to the 20% of the population, while the 20% The remaining ownership of those lands belonged to 80% of the leftover population.

As we mentioned at the beginning of this post, Mr. Pareto they had an empirical basis, even Pareto investigated this experiment in botany. Thus, Pareto observed that 20% of the pods he had planted in his garden generated 80% of the peas, so it seems to be a rule of nature itself, on which other fundamental pillars of life, such as the economy, are governed.

What can we apply the Pareto Law to?

In addition to economics or botany, Pareto's Law can be applied to numerous areas of life, let's look at some examples:

• Companies: 20% of customers or products are responsible for 80% of billing.
• Sport: 20% of athletes participate in 80% of the competitions.
• Stock market: 80% of stock market profits come from 20% of securities on the stock exchange.
• Quality control: 80% of problems are caused by 20% of causes.

Right now you may be wondering if this rule that seems to have been brought by nature itself is that exact, the answer is as short as it is clear, NO. Obviously it won't always be a 80-20, there can be many different combinations, but they all end up in the same way. Most of the results come from less effort.

This fact helps us to realize that we should not be blinded by trying to achieve 100% of the results, since this would force us to use 100% of our effort. It's best to achieve 80% of the expected results with just 20% of effort.

How does the Pareto Law solve my personal finances?

It's a more than obvious question, although if you've come this far, you probably already have an idea of what the solution is. From what we have seen, with 20% of the effort, 80% of the results are achieved, which translates into your finances how to achieve 80% of economic results with just 20% of investments. It's not about investing in more sites, but in a smarter way.

As we mentioned before, the percentage is often not accurate, and in fact in Reental The percentage would be 95-5. Because to receive 95% of the results of invest in the real estate sector safely, you only have to register on our website and invest in Reental real estate. This way you will get estimated returns of +11% with just one registration. Sounds good right? Don't miss the opportunity to be another example of the application of Pareto's Law to your personal finances.

In order not to miss any of the opportunities we present, we recommend that you join our group of Discord or Telegram To get to know others Reentels and the whole team. Of course we invite you to take a look at our articles on the blog to continue informing you.

Welcome to the new way of doing finance, welcome to Reental.