Financial Tips: Personal finance is concerned with how you manage your finances. All people want is a hack that will allow them to multiply their money exponentially. Building wealth is a process that requires striking a balance between investing, saving, and budgeting. It’s not like eating a two-minute instant noodle. Naturally, when it comes to personal finance, there are some general guidelines. Both people who are just starting out on their financial journey and those who are already on it can use these guidelines. These guidelines merely give you a general idea; there is no “one size fits all” funda.
Rule of 72
The “Rule of 72” calculates how many years it will take you to double your investment in a specific financial instrument. To find out how long it would take to double your investments, divide the rate of return by 72.The Rule of 72 may apply to anything that grows at a compound rate, such as the population, macroeconomic data, charges, or debts, according to Ashish Aggarwal, MD, Acube Ventures. If the GDP grows at the current rate of 4% annually, the economy is expected to double in 72 / 4% = 18 years.
100- Age Rule
The underlying idea of age-based asset allocation is that as you get older, you should be less exposed to investment risk. Since these investments have a higher return at a higher risk, it is commonly referred to as the percentage of equity in your portfolio. Let’s say you are forty years old. Investing in equities may make up 60% of your portfolio, with debt funds and fixed-income securities making up the remaining 40%. However, if you are sixty years old, the ratio will be reversed, with 40% invested in equity and the remaining 60% in debt.
50-30-20 Rule
Among the most popular and easily understood budgeting techniques is the 50-30-20 rule. According to the rule, an individual’s take-home pay should be split into three categories: needs (50%) wants (30%) and savings (20%).
1st Week Rule
Personal finance experts advise you to save and invest the 20% of your income that is designated for savings in the first week of order to establish discipline in your investing.
40% EMI Rule
Simple maths makes up the 40% EMI rule. Make sure that the total amount of your monthly installment debt does not exceed forty percent of your income.
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