5 Clever Personal Finance Rules

1/ Rule of 72 This rule will tell you in how many years your invested money will double with the rate of return it's earning. Dividing "72" by the return you earn = No. of years it will take to double your money. Ex: If you earn 10% interest 72/10 = 7.2 years to double

2/ Rule of 70 This rule will tell you in how many years your money's value will reduce to half. Dividing "70" by the inflation rate = No. Of years after which your money's worth will be half Ex: If inflation rate is 6% 70/6 = 11.6 years.  So, if you keep $100 with yourself then in 12 years that money could only buy products worth $50 as of today's price. This tells you the importance of continuously saving & investing your money rather than keeping it ideal in a bank account.

3/ 50-30-20 Rule This rule will tell you how to budget your money by dividing it into three parts. 50% for needs 30% for desires 20% for investments

4/ 6X Rule This rule will tell you how much money you must keep aside for emergencies. Before investing your money, you must have 6 months of expenses put aside. If your monthly expense is $3,000 then, $3000 x 6 = $18,000.  If that is too high then ensure you have access to a line of credit and that can act as your buffer.

5/ 120-Age rule This rule will tell you how much % of your savings you should allocate to the equity market for investment. Your age = 42 Then, 120 - 42 = 78   It means, at least 78% of your savings should be invested in equity (Direct stock/Mutual funds, ETF's etc.)