Nine Personal Finance Rules from Dad

Whether you’re a student, a working professional, or retired, these timeless finance principles can help you stay financially healthy and plan better for your future.

1. Rule of 72 – Double Your Money

This rule tells you how many years it’ll take to double your money at a given annual return rate.
Formula: 72 ÷ Interest Rate = Years to Double

• At 8% interest → 72 ÷ 8 = 9 years
• At 6% interest → 72 ÷ 6 = 12 years
• At 9% interest → 72 ÷ 9 = 8 years

2. Rule of 70 – Understand Inflation’s Impact

Helps estimate how long it takes for the value of money to halve due to inflation.
Formula: 70 ÷ Inflation Rate = Years until Value Halves

• At 7% inflation → 70 ÷ 7 = 10 years

3. 4% Withdrawal Rule – Financial Freedom Planning

Estimate the retirement corpus needed.
Corpus Required = 25 × Annual Expenses
Withdrawal = 4% annually

• If annual expenses = ₹5,00,000 → Corpus = ₹1.25 crore
• 50% in fixed income, 50% in equity
• Withdraw ₹5 lakhs annually

Works 96% of the time over a 30-year retirement.

4. 100 Minus Age Rule – Asset Allocation

Used for deciding equity vs. debt allocation.
Formula: 100 - Your Age = % in Equity

• Age 30 → 70% Equity, 30% Debt
• Age 60 → 40% Equity, 60% Debt

5. 10-5-3 Rule – Set Realistic Expectations

Expected returns from different asset classes:

• 10% – Equity / Mutual Funds
• 5% – Debt instruments / FDs
• 3% – Savings Account

6. 50-30-20 Rule – Income Allocation

Divide monthly income as:

• 50% – Needs (Rent, groceries, EMIs)
• 30% – Wants (Travel, entertainment)
• 20% – Savings (Equity, FDs, Mutual Funds)

Try to save at least 20% of your income.

7. 3X Emergency Fund Rule

Build an emergency fund of at least:
3× Monthly Income (Preferably 6×)
Helps during job loss, medical emergency, etc.

8. 40% EMI Rule – Loan Safety

Don’t spend more than 40% of your income on EMIs.

• Income = ₹50,000 → EMI should ≤ ₹20,000
  Used by banks to assess loan eligibility.

9. Life Insurance Rule – Secure Your Family

Coverage = 20 × Annual Income

• Income = ₹5,00,000 → Insurance = ₹1 crore
  Ensures your family’s financial security.

Bonus Tips

• Spend using secondary income (e.g., rent, dividends)
• Invest your primary income to grow wealth

Mutual Fund Types

• Large Cap (e.g., Reliance): Stable, moderate returns
• Small Cap: Higher risk, higher potential return

Platforms to Explore

• Fidelity
• Vanguard
• Charles Schwab
• Goldman Sachs

Check for entry/exit fees before investing.

Wealth Habit

💡 Invest 10% of your weekly income every Monday.

Builds discipline and averages out market volatility.

Resources

• Top 25 Mutual Funds – MarketWatch

Stay consistent, invest wisely, and build the habit.
These rules aren’t shortcuts—they’re long-term guiding lights for financial freedom.