*Personal Finance Rules Explained * 1. *Rule of 72 (Double Yo | ACEink Official
*Personal Finance Rules Explained *
1. *Rule of 72 (Double Your Money)*
- Divide 72 by the interest rate to know how many years it takes to double your money.
- Example: At 8% interest, it takes 9 years.
2. *Rule of 114 (Triple)*
- Divide 114 by the interest rate to know how many years it takes to triple your money.
- Example: At 12% interest, it takes 9.5 years.
3. *Rule of 144 (Quadruple)*
- Divide 144 by the interest rate to know how many years it takes to quadruple your money.
- Example: At 12% interest, it takes 12 years.
4. *Rule of 70 (Inflation)*
- Divide 70 by the current inflation rate to find out when your investment's value will halve.
- Example: At 7% inflation, your money's value halves in 10 years.
5. *50-30-20 Rule: Allocation*
- Allocate your income into:
- 50% for Needs (Groceries, rent, EMI).
- 30% for Wants (Entertainment, vacations).
- 20% for Savings (Equity, MFs, FD).
- Aim to save at least 20% of your income.
6. *3X Emergency Rule*
- Keep at least 3 times your monthly income in an emergency fund.
- Consider having around 6 times your monthly income for added security.
7. *40% EMI Rule*
- Ensure your EMIs don't exceed 40% of your income.
- Example: If you earn Rs. 50,000 per month, keep EMIs under Rs. 20,000.
8. *Life Insurance Rule*
- Maintain a life insurance sum assured equivalent to 20 times your annual income.
Disclaimer : This is not an investment advice and this is not an investment recommendation.