#63 - Ten Personal Finance Rules That Everyone Should Know

Notes:

In this episode, we discuss ten personal finance rules that everyone should know.

1) Rule of 72

No. of yrs required to double your money at a given rate, divide 72 by interest rate

2) Rule of 70

Divide 70 by the current inflation rate to know how fast the value of your investment will get reduced to half its present value.

3) 4% Rule for Financial Freedom

Corpus Reqd = 25 times of your estimated Annual Expenses

CBM Episode on Retiring: https://coldbrew.money/34-how-much-you-need-to-retire-%f0%9f%a4%94/

4) 100 minus your age rule

This rule is used for asset allocation. Subtract your age from 100 to find out, how much of your portfolio should be allocated to equities.

CBM Episode on automating finances: https://coldbrew.money/4-automating-your-finances/

5) 10-5-3 Rule

One should have reasonable returns expectations post taxes

10% Rate of return – Equity/Mutual Funds

5%- Debts ( Fixed Deposits or Other Debt instruments)

3% – Savings Account

6) 50-30-20 Rule – about the allocation of income to expense

Divide your income into 50%- Needs, 30%- Wants, 20%- Savings

CBM Episode on 50-30-20 Rule: https://coldbrew.money/3-budgeting/

7) 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.

8) 40% EMI Rule

Never go beyond 40% of your income into EMIs.

9) Life Insurance Rule

Always have Sum Assured as 20 times of your Annual Income. 20 X Annual Income

10) Rule for gold investment

Half of your age, allocate that much percent of your net wealth into gold.

Prerak Sheth’s Profile: https://www.linkedin.com/in/preraksheth/

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Disclaimer:

The information in this video is general information only and should not be taken as constituting professional advice from Atit or Tapan. Atit and Tapan are not financial advisers. You should consider seeking independent legal, financial, taxation or other advice to check how the information relates to your unique circumstances. Atit or Tapan are not liable for any loss caused, whether due to negligence or otherwise arising from the use of, or reliance on, the information provided directly or indirectly, by use of this video.

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