🧵 Thread on NINE PERSONAL FINANCE RULES WE ALL MUST KNOW
1) Rule of 72 (Double Your Money)
2) Rule of 70 (Inflation)
3) 4% Withdrawal Rule
4) 100 Minus Age Rule
5) 10,5,3 Rule
6) 50-30-20 Rule
7) 3X Emergency Rule
8) 40℅ EMI Rule
9) Life Insurance Rule
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1) Rule of 72
No.of yrs required to double your money at a given rate,U just divide 72 by interest rate
Eg,if you want to know how long it will take to double your money at 8% interest,divide 72 by 8 and get 9 yrs
At 6% rate,it will take 12 yrs
At 9% rate,it will take 8 yrs
2) Rule of 70
Divide 70 by current inflation rate to know how fast the value of your investment will get reduced to half its present value.
Inflation rate of 7% will reduce the value of your money to half in 10 years.
3)4% Rule for FinancialFreedom
Corpus Required=25tms of your Estd Annual Exp.
Eg-if your An exp after 50yrs age is 5L and you wish to retire corpus req is 1.25crs.
Put 50% in Debt & 50% in equity.
Withdraw 4% every year,i.e.5L
This rule works for 96% of time in 30 yrs period
4) 100 minus your age rule
This rule is used for asset allocation.Subtract your age from 100 to find out,how much of your portfolio should be allocated to equities
Suppose your Age is 30 so (100-30=70)
Equity:70%
Debt:30%
But if your Age is 60 so (100-60= 40)
Eq 40% & D 60%