__7 Thumb rules for investing__

** **

You’re Business Is Your Greatest Asset, but not you’re Only
Asset. Compared With Most Professionals, Understanding The Dynamics Of The
Stock Market, Real Estate, And Commodities (Gold And Silver) Requires More Time
And Experience.

**What is the rule of thumb?**

**
**The general rule is a heuristic reference that can provide simplified
suggestions or a set of basic rules for a specific topic or course of action.
It is a general principle that provides practical guidance for performing or
solving a specific task.

However, the rule of thumb can be used as a guide.

**First let’s look the 7 thumb rules to
understand how fast is Your Money Growing****?**

**Rule of thumb #1: ****
**Rule 72 is a quick and useful formula, usually used to estimate the
number of years required to double the amount of money invested for a given
annual return.

Using this rule, if you divide 72 by the expected return, you can very accurately estimate the number of years it will take for your funds to double.

This means that your 100,000 rupees will be converted to 200,000 rupees in 12 years.

**Rule of thumb #2: ****
**Rule 114 is a quick and useful formula that is often used to estimate the
number of years required to triple the amount invested in a given annual
return.

Use this to estimate how long it will take for your money to triple. It works on the same principle, usually 72.

Divide 114 by the interest rate to find the number of years that 10,000 will become 30,000.

If you invest 100,000 rupees in a product with an interest
rate of 6%, then according to rule 114, it will be 300,000 rupees after 19
years.

**Rule of
thumb #3: ****
**Rule 144 is a Quick and useful formula that is often used to estimate the
number of years required quadrupling the amount of investment for a given
annual return.

If you want
to use the same logic as rules 72 and 114 to determine how many years it takes
to quadruple your investment, you can use rule 144. Using this rule, if you
divide 144 by the expected rate of return, you will accurately estimate how
many years it will take for your funds to quadruple.

For example, if you invest 100,000 rupees in a product with an interest rate of
6%, it will become 4 million rupees in 24 years under rule 144.

Calculated at a 12% interest rate, 10,000 becomes 40,000 after 12 years.

**Rule of Thumb #4:**

this is a good rule of thumb to determine the value of your current
wealth in 10-20 years. Even if you don't spend (or invest) a dime, its value
will be much lower than the money you want to spend. The reason today is
inflation.

This is a useful rule of thumb for predicting your future purchasing
power. This is especially useful if you plan to retire because it affects how
you set up monthly payments. However, keep in mind that the inflation rate will
change from time to time.

**
**An inflation rate of 7% will halve the value of your funds in 10 years.
(70/7 = 10 years)

**Rule of Thumb #5: The 100 Negative Age Rule**

This rule of thumb assumes that a person’s capital allocation
after retirement should be reduced. This rule is used for asset allocation. Subtract
your age from 100 to determine how much of your portfolio should be broken down
into stocks

## If you are 35 years
old and want to invest 10,000 rupees, according to the 100 minus rule, your
capital allocation is 100-35 = 65%. Stocks and debts of Rs 3,500.

**Rule of Thumb
#6: The emergency fund rule
**As the name suggests, funds used for emergencies are called emergency
funds. From a few months to a year as a reserve fund. When calculating your
expenses, consider grocery expenses, utility bills, rent, EMI, etc. As a return
on a savings Account. At the same time, the liquidity of current funds such as
savings accounts is very strong, that is, the funds can be used in a short
period of time.

Deposit expenses in a current savings account for at least 36 months to make it available for short-term use.

**Let’s look at there are two thumb
rules you can use while investing**

·
10 percent for retirement rule

·
The 4% withdrawal rule

**The 10, 5, 3 rule
**When we invest, or even consider investment funds, we usually first look
for the rate of return we can get from the investment. The 10, 5, 3 rule will
help you determine the average return on your investment.

Although mutual funds do not have guaranteed returns, the rule predicts a return of 10% for long-term equity investments, 5% for debt securities, and an average return of 3%, usually from savings. Bank Accounts.

**Rule of Thumb #7: ****The Net worth rule **

there is also a simple mathematical formula to see if you can call him
rich.

To do this, multiply your age by your total income and divide by 10. If your
net worth is equal to or greater than other people, you can be considered rich.

In India, experts say that the divisor should be 20 instead of 10. So, for
example, if you are 30 years old and have a total income of 1.2 million, then
your net worth must be at least 1.8 million to be considered Rich....

**Key Findings**

·
Rules 70, 72, 114, and 144, can be used to determine
how long it takes to double, triple, and quadruple your investment,
respectively.

·
Follow the 10% minimum rule to start investing.

·
If you are just starting your investment journey,
please consider the emergency fund rules.

·
The 100 Negative Age Rule is how you
divide the assets in your portfolio.

·
Finally, A 4% retirement plan may be beneficial to
retirees because their financial independence is more important.

**In Short
Bottom Line:**** **

The rule of thumb, or the rule of thumb as it is commonly known, is a simple
way to learn or apply things. These practices are based on practical experience
so that you can apply these things to real life and achieve results. As a
result, these rules should never be considered as absolute truths.