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%.