Mega Thread on Personal Finance 101

๐Ÿ‘‡๐Ÿ‘‡๐Ÿ‘‡

Rule of 72 (Double Your Money)
Rule of 114 (Triple)
Rule of 144 (Quadruple)
Rule of 70 (Inflation)
4% Withdrawal Rule
100 - Minus Age Rule
10, 5, 3 Rule
50-30-20 Rule
3X Emergency Rule
40โ„… EMI Rule
Life Insurance Rule

โ™ป Rule of 72

No. of yrs required to double your money at a given rate, U just divide 72 by interest rate
Eg, if U 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
๐Ÿ“‹Rule of 114

No. of years required to triple your money at a given rate, U just divide 114 by interest rate.

For example, if you want to know how long it will take to triple your money at 12% interest, divide 114 by 12 and get 9.5 years

At 6% interest rate, it will take 19yrs
๐Ÿ—’๏ธ Rule of 144

No. of years required to, quadruple your money at a given rate, U just divide 144 by interest rate.

For eg, if U want to know how long it will take to quadruple your money at 12% interest, divide 144 by 12 and get 12 yrs

At a 6% interest rate, it will take 24yrs
๐Ÿ—’๏ธ Rule of 70

Divide 70 by the current inflation rate to know how fast the value of your investment will get reduced to half its present value.

The inflation rate of 7% will reduce the value of your money to half in 10 years.
*4% Rule for Financial Freedom*

Corpus Reqd- 25*Annual Expenses

Eg- the annual expense is 500,000 then the corpus required to retire is 1.25 cr.

Put 50% into fixed income & 50% into equity.

Withdraw 4% every yr, i.e.5 lac.

This rule works for 96% of the time in 30 yr period
โ™ป๏ธ *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

Age 30

Equity : 70%
Debt : 30%

Age 60

Equity : 40%
Debt : 60
๐Ÿงฟ 10-5-3 Rule

One should have reasonable returns expectations

10โ„… Rate of return - Equity / Mutual Funds
5โ„… - Debts ( Fixed Deposits or Other Debt instruments)
3โ„… - Savings Account
๐Ÿ’Ž *50-30-20 Rule - Allocation*

Divide your income into
50โ„… - Needs - Groceries, rent, EMI
30โ„… - Wants - Entertainment, vacations, etc
20โ„… - Savings - Equity, MFs, Debt, FD, etc

At least try to save 20โ„… of your income.
You can definitely save more
โญ• *3X Emergency Rule*

Always put at least 3 times your monthly income in Emergency funds for emergencies such as loss of employment, medical emergency, etc.

3 X Monthly Income

You can have around 6 X Monthly Income to be on a safer side
๐Ÿฆ *40โ„… EMI Rule*

Never go beyond 40โ„… of your income into EMIs.

Say you earn, 50,000 per month. So you should not have EMIs of more than 20,000.

This Rule is generally used by Finance companies to provide loans. You can use it to manage your finances.
๐Ÿ”Š *Life Insurance Rule*

Always have Sum Assured as 20 times of your Annual Income
๐Ÿ’ฐ 20 X Annual Income

Say you earn 5 Lacs annually, You should at least have 1 crore insurance by following this Rule.

This entire thread copied from @BullMarkets1 (Original Creator)
Tagging for reach

@Gautam__Baid
@dmuthuk
@Vivek_Investor
@VJ_Rabindranath
@ms89_meet
@monikahalan
@datta_arvind
Another Good thread on Personal Finance basics
https://t.co/eQM5mYoNFV

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Ok here is the explanation. Grab a cup of coffee and read on. If you have not read/noticed this, you will see intraday options movement in a new light.


Say we have two options, one 50 delta ATM options and another 30 delta OTM option. Normally for a 100 point move, the ATM option will move 50 points and the OTM option will move 30 points. But in a high volatile environment, the OTM option will also move nearly 50 points

To understand why this happens, first understand why an ATM option is 50 delta. An ATM option has the probability of 50% of expiring as ITM. The price just has to close a rupee above the strike for the CE to be ITM and vice versa for PEs

Now think of a highly volatile day like today. If someone is asked where the BNF will close for the day or expiry, no one can answer. BNF can close freakin anywhere, That makes every option of an equal probability of being ITM. So all options have a 50% probability of being ITM

Hence, when a huge volatile move starts, all OTM options behave like ATM options. This phenomenon was first observed in the Black Monday crash of 1987 at Wall Street, which also gave rise to the volatility skew/smirk
** MEGA THREAD ON Cryptocurrencies/Blockchain**

I wanted to know the best resources to learn about cryptocurrencies and blockchain for someone with zero knowledge. I asked Twitter, and Twitter answered.

This thread is a compilation of the best resources I was recommended. ๐Ÿ‘‡๐Ÿ‘‡

Let's start with ** BOOKS **

The first thing you should do before you pick up any book:

Learn about Bitcoin & Ethereum by reading the respective whitepapers.

- [Bitcoin white paper](https://t.co/cErOaFn6QL) by Satoshi Nakamoto

- [Ethereum White paper] (
https://t.co/0g5kYCGJGq) by Vitalik Buterin

Even if you are not tech savvy, you can get a good grasp about how blockchain functions from these papers.

1) *The Basics of Bitcoins and Blockchains: An Introduction to Cryptocurrencies and the Technology that Powers Them* by Antony Lewis

This book covers topics such as the history of Bitcoin, the Bitcoin blockchain, and Bitcoin buying, selling, and mining.

It also answers how payments are made and how transactions are kept secure.

Other cryptocurrencies and cryptocurrency pricing are examined, answering how one puts a value on cryptocurrencies and digital tokens.

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