Thread by @iSourabhMishra

Personal Finance Rules -Thread

🔅 Rule of 72 (Double ur Money)
🔅 Rule of 114 (Triple ur money)
🔅 4% Withdrawal Rule
🔅 Asset Allocation Rule
🔅 10, 5, 3 Rule
🔅 50-30-20 Rule
🔅 6X Emergency Rule
🔅 40% EMI Rule
🔅 Life Insurance

#EditedMsgWA

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

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

4% Rule for Financial Freedom For retired

Corpus Reqd- 25*Annual Expenses

Eg- annual expense is 500,000 then 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 time in 30 yr period

Asset Allocation 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 35

Equity : 65%
Debt : 35%

Age 60

Equity : 40%
Debt : 60%

10-5-3 Rule

One should have reasonable returns expectations

10% Rate of return - Equity / Mutual Funds
5% - Debts ( Fixed Deposits or Other Debt instruments)
3% - Savings Account

50-30-20 Rule - Allocation

Divide your income into
50℅ - Needs - Groceries, rent, emi
30℅ - Wants - Entertainment, vacations, etc
20℅ - Savings - Equity, MFs, Debt, FD, etc

Atleast try to save 20℅ of your income.
You can definitely save more

6X Emergency fund Rule

Always put atleast 6 times your monthly income in Emergency funds for emergencies such as Loss of employment, medical emergency, etc.

6 X Monthly Income

40% EMI Rule

Never go beyond 40% of your income into EMIs.

Say 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.

Life Insurance Rule

Have Sum Assured as Min 20 times of your Annual Income

20 X Annual Income

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

Hey @threadreaderapp pls unroll