investment method
As important as it is to earn money, it is equally important to invest it in the right place and spend it wisely. In today’s time, there are many investment options available, but only one who understands and follows some simple financial rules becomes a successful investor. These rules not only help in planning investments but also secure future financial needs. Because the stock market has become very volatile due to global tension, the right investment strategy will not only protect your hard-earned money but will also increase it. Let us know 7 such investment rules, which can help in strengthening your financial position.
Rule of 72: When will the money double?
Rule of 72 is very popular in the world of investment. With its help it can be found out in how much time your investment will double. For this, 72 is divided by the annual return on investment. For example, if an investment is giving an annual return of 12%, then dividing 72 by 12 results in 6. That means money can double in about 6 years.
Rule of 114: Mathematics of tripling
If you want to know when your investment will triple, then Rule of 114 can prove helpful. In this, 114 is divided by the estimated return rate. If you are getting 12% return on investment then the money can triple in about 9.5 years.
Rule of 144: Four times return formula
At the same time, Rule of 144 tells how much time it will take for the investment to quadruple. For this, 144 is divided by the annual return. If the return is 12% then the investment amount can quadruple in about 12 years.
50-30-20 Rule: Fair distribution of earnings
This rule is quite popular for budget making. You set it according to your monthly salary. For example, if your monthly salary is Rs 50 thousand, then divide your salary into 3 parts, out of which keep 50 percent i.e. Rs 25 thousand for essential expenses, which will cover your rent and ration. Apart from this, divide the remaining Rs 25,000 into two parts in which 30 per cent of the money should be taken out for entertainment, eating out or travelling, and keep the remaining 20 per cent for investment every month. Put some of it in SIP and keep some as cash reserve. This maintains financial discipline.
100 Minus Age Rule: Balance of equity and debt
This rule tells how much portion of the investment should be in equity and how much in debt. Under this, the percentage that comes after subtracting your age from 100 can be invested in equity. For example, at the age of 30, 70% of the investment can be kept in equity and 30% in debt.
Minimum 10% Investment Rule
According to experts, every person should invest at least 10% of his income regularly. Along with increasing the income, the investment amount should also be increased so that a bigger fund can be created in the long term.
Emergency Fund Rule: Support in difficult times
The most important part of financial planning is the emergency fund. This is a fund that helps in case of job loss, illness or any other emergency. Generally, it is advisable to keep an amount equal to at least 6 months of expenses as emergency fund. By adopting these seven rules, any person can create a better balance between his savings, investments and expenses. With the right financial discipline and long-term thinking, these formulas can play an important role in making you financially strong.
Disclaimer: This article is for information only and should not be considered as investment advice in any way. TV9 Bharatvarsha advises its readers and viewers to consult their financial advisors before taking any money-related decisions.
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