Someone sent me 11 personal finance rules every person should know: Save this thread π§΅ 1) Rule of 72 (Double Your Money) 2) Rule of 70 (Inflation Adjustment) 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 10) Rule of 144 11) Revolving Credit Formula:- (1+i%)^12-1.

(1) Rule of 72 (Double Your Money) You can estimate how long it will take to double your money by dividing 72 by the interest rate. So, with an 8% rate, it will be 9 years; with 6%, it will be 12 years.

(2) Rule of 70 (Inflation Adjustment) Divide 70 by the current inflation rate to see how long it takes for your investment's value to drop to half. If inflation is at 7%, your money will be cut in half in 10 years.

(3) 4% Withdrawal Rule Corpus Required = 25 times of your estimated Annual Expenses. Eg- if your annual expense after 50 years of age is 500,000 and you wish to take VRS then the corpus with you required is 1.25 crore. Put 50% of this into fixed income & 50% into equity.

(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 β 30 = 70) Equity : 70% Debt : 30% But if your Age is 60 so (100 β 60 = 40)

(5) 10-5-3 Rule One should have reasonable returns expectations 10β Rate of return β Equity / Mutual Funds 5β β Debts ( Fixed Deposits or Other Debt instruments) 3β β Savings Account

(6) 50-30-20 Rule β about the allocation of income to expense Divide your income into 50β β Needs (Groceries, rent, EMI, etc) 30β β Wants / Desires (Entertainment, vacations, etc) 20β β Savings (Equity, MFs, Debt, FD, etc) At least try to save 20β of your income. You can

(7) 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 In fact, one can have around 6 X Monthly Income in liquid or near liquid assets to be on a safer

(8) 40β EMI Rule Never go beyond 40β of your income into EMIs. Say if you earn βΉ 50,000 per month. Then you should not have EMIs of more than βΉ 20,000. This Rule is generally used by Finance companies to provide loans. You can use it to manage your finances.

(9) Life Insurance Rule Always have Sum Assured as 20 times of your Annual Income. 20 X Annual Income Say you earn βΉ 5 Lacs annually, you should at least have 1 crore insurance by following this Rule.

(10) Rule of 144 No of years it takes to double your money at a given rate when investment is done via SIP. E.g . If the rate is 15% then sip corpus will double in 144/15= 9.6 years.

(11) Revolving Credit Formula:- (1+i%)^12-1. Example:- If a credit card Company chargeβs 3% per month as interest. The Compound Annual cost is = (1+3%)^12-1 = 42.6%

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