7 Investment Rules: As important as it is to earn money, it is equally important to invest it wisely and spend it wisely. There are many investment options available today, but a successful investor is one who understands and follows some simple financial rules. These rules not only help in investment planning but also secure future financial needs. Since the stock market has been extremely volatile due to global tensions, a good investment strategy will not only protect your hard-earned money but also grow it. Let’s learn about seven investment rules that can help strengthen your financial position.
Rule of 72: When will your money double?
Rule of 72 is quite popular in the world of investment. This can be used to find out how much time it will take for your investment to double. This method is used to divide 72 by the annual return on investment. For example, if an investment is giving an annual return of 12%, then dividing 72 by 12 comes to 6. This means that your money can double in about 6 years.
Rule of 114: The Math of Tripling
If you want to know when your investment will triple, the Rule of 114 can be helpful. In this, 114 has to be divided by the estimated return rate. If the investment is giving 12% returns, your money can triple in about 9.5 years.
Rule of 144: The formula for quadrupling returns
The Rule of 144 tells you how long it will take for your investment to quadruple. Divide 144 by your annual return. If the return is 12%, your investment can quadruple in approximately 12 years.
50-30-20 rule: fair distribution of income
This rule is very popular for making budget. You set it based on your monthly salary. For example, if your monthly salary is ₹ 50,000, then divide your salary into three parts. Set aside 50%, or ₹25,000, for essential expenses, which will cover your rent and groceries. Divide the remaining ₹25,000 into two parts: 30% for hobbies, entertainment, eating out or travelling, and the remaining 20% for monthly investments. Invest some of this in SIP and keep some as cash reserve. This helps in maintaining financial discipline.
100 minus edge rule: striking a balance between equity and debt
This rule decides how much of your investment should be in equity and how much in debt. By subtracting your age from 100, you get the percentage which you can invest in equity. For example, at the age of 30, you can invest 70% in equity and 30% in debt.
Minimum 10% investment rule
According to experts, every person should invest at least 10% of his income regularly. Apart from this, the investment amount should be increased as the income increases so that a larger fund can be created in the long run.
Emergency Fund Rule: A support in difficult times
The most important part of financial planning is emergency fund. This fund helps in case of job loss, illness or any other emergency. Generally, it is advisable to keep aside an amount equal to at least six months of expenses as an emergency fund. By following these seven rules, anyone can create a better balance between savings, investment and expenses. With the right financial discipline and long-term thinking, these formulas can play an important role in making you financially strong.
The post Want to convert thousands into crores? Know the 7 golden rules to increase money appeared first on Latest.
Comments are closed.