10 Powerful Thumb Rules of Personal Finance 💰
A must-read thread for every new-earner 👇
#Rupee #FinanceFridaysbyRecipe
A must-read thread for every new-earner 👇
#Rupee #FinanceFridaysbyRecipe
1) Rule of 72
The formula estimates the amount of time it takes for an investment to double in value, earning a fixed annual rate of return.
If you earn 6% on your investment annually it will take (72/6=12) 12 years for your investment to double.
#investment
The formula estimates the amount of time it takes for an investment to double in value, earning a fixed annual rate of return.
If you earn 6% on your investment annually it will take (72/6=12) 12 years for your investment to double.
#investment
2) 100 minus age rule
The rule is designed to help you determine the asset allocation between equity and debt.
You need to subtract your age from the number 100 to get the equity allocation%
If your age is 30, equity allocation should be 70% (100-30)
#portfolio
The rule is designed to help you determine the asset allocation between equity and debt.
You need to subtract your age from the number 100 to get the equity allocation%
If your age is 30, equity allocation should be 70% (100-30)
#portfolio
3) 50/30/20 Rule
This basic rule of thumb is to divide your monthly after-tax income into three spending categories:
• 50% for needs
• 30% for wants
• 20% for savings
#SpendLikeItMatters
This basic rule of thumb is to divide your monthly after-tax income into three spending categories:
• 50% for needs
• 30% for wants
• 20% for savings
#SpendLikeItMatters
5) Emergency Fund rule
Save about 3-6 months of your expenses and keep it as an emergency fund.
You never know what future prevails so having a cushion to fall on is the wise choice.
#emergencyalert
Save about 3-6 months of your expenses and keep it as an emergency fund.
You never know what future prevails so having a cushion to fall on is the wise choice.
#emergencyalert
6) Term Insurance Rule
You need insurance coverage of 15-20 times of your annualized monthly expenditure.
#insurance #lifeinsurance
You need insurance coverage of 15-20 times of your annualized monthly expenditure.
#insurance #lifeinsurance
8) 10% Retirement rule
If we start investing just 10% of our income from a young age, we can accumulate a huge corpus of money to retire.
If you save just Rs 2000 every month and it grows at 10%, it sums to 1.15 Cr. in 39 years.
#retirement #personalfinance
If we start investing just 10% of our income from a young age, we can accumulate a huge corpus of money to retire.
If you save just Rs 2000 every month and it grows at 10%, it sums to 1.15 Cr. in 39 years.
#retirement #personalfinance
9) 10-5-3 Rule
One should have reasonable return expectations.
10℅ : From Equity / Mutual Funds
5℅ : From Debt (FDs, etc)
3℅ : From Savings Account
#optionbuying #StockMarketindia
One should have reasonable return expectations.
10℅ : From Equity / Mutual Funds
5℅ : From Debt (FDs, etc)
3℅ : From Savings Account
#optionbuying #StockMarketindia
These rules are very easy to calculate & apply. However, they only provide a general direction and may not necessarily give you the exact picture.
For a plan more specific to your needs and goals, use Finology Recipe!
For a plan more specific to your needs and goals, use Finology Recipe!
If you have any queries related to your personal finance, tweet to us with #AskYourChef and we'll provide you with practical solutions for the same.
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