Thread by @bankniftydoctor

Some Financial Rules

Rule of 72 (Double Your Money)

No. of yrs required to double your money at a given rate, U just divide 72 by interest rate

Eg, at 8% interest, divide 72 by 8 and get 9 yrs..so money 💰will double in 9 yes.

At 6%, it will be 12 yrs.

Will continue.
1/n

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%, divide 114 by 12 and get 9.5 years

At 6% interest rate, it will take 19yrs.

2/n

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%

3/n

40℅ EMI Rule

Never go beyond 40℅ of your income into EMIs. 

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

This Rule is generally used by Finance companies to provide loans.
You can use it to manage your finances. 

4/n

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.

5/n
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