Personal Finance

Rule of 72 (Double Your Money)

No. of yrs required to double your money at a given rate, U just divide 72 by the interest rate
Eg, if u want to know how long it will take to double your money at 8% interest, divide 72 by 8 and get 9 yrs
At a 6% rate, it will take 12 yrs
At a 9% rate, it will take 8 yrs


Rule of 114 (Triple)

No. of years required to triple your money at a given rate, You just divide 114 by the 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 a 6% interest rate, it will take 19yrs.


Rule of 70 (Inflation)

Divide 70 by the current inflation rate to know how fast the value of your investment will get reduced to half its present value. The inflation rate of 7% will reduce the value of your money to half in 10 years.


50-30-20 Rule

Divide your income into
50%-Needs – Groceries, Rent, EMI
30% – Wants – Entertainment, Vacations, etc
20% – Savings – Equity, MFs, Debt, FD, etc
At least try to save 20% of your income.
You can definitely save more


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
You can have around 6 x monthly Income to be on a safer side


40% EMI Rule

Never go beyond 40% of your income into EMls.

Say you earn, 50,000 per month. So you should not have EMls of 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

Always have Sum Assured as 20 times your Annual Income