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Rules of Personal Finance

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This rule is about the allocation of income to expenses and investments. 50% Needs 30% Wants 30% Savings

50-30-20 Rule

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This rule helps you set reasonable expectations regarding returns from various investments made for the long term. 10% Equity/Mutual Funds 5% on bonds and F.D. 3% Savings

10-5-3 Rule

2

Subtract your age from 100 to ascertain how much of your savings should be allocated to equities

100 Minus your Age Rule

3

To know in how many years your investment will be doubled?  Divide 72 by your rate of returns; that’s the number of years.

Rule of 72

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To know in how many years your investment will be tripled, divide 144 by your rate of returns; that’s the number of years.

Rule of 144

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It estimates the appropriate estimate of your reduced wealth due to inflation a few years down the line.

Rule of 70

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You should never have more than 40% of your income into EMIs.  Eg. With a salary of 60,000 per month, your EMIs should not exceed 24,000.

40% EMI Rule

7

Never take out more than 4% of your retirement corpus per year. The  Corpus required is 25 times of your estimated Annual Expenses.

Rule of 4%

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Always strive to take a policy having a sum insured of 20X your current annual income. This will help cover expenses in the future.

Life Insurance Rule

9

Put an amount of at least 3 times of your current monthly income in an emergency fund to support in case of an emergency.

Emergency Fund rule

10

Want to purchase an expensive item? Unsure about it, delay it for a week. This will give you time to process it's absolute importance.

1-Week spending rule

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THANK YOU

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