Rules of Thumb in dealing with your money!

10-5-3 Rule: (for reasonable return expectations)

• Equity Products: 10% (Equity Mutual Funds, Shares)
• Debt Instruments: 5% (Bank / Post Office Deposits, Debt MFs, etc.)

50:25:25 Rule (for balanced life now & for future)

• 50% of your income towards NEEDS (Food, Home loan EMIs, education, etc.)
• 25% of your income towards WANTS (Entertainment, Vacations, etc.)
• 25% of your income towards SAVINGS (for retirement, children's future, etc.)

3x-6x Emergency Rule: (for peace of mind)

• Set aside 3 to 6 times of your monthly income as Emergency fund & maintain this as a fixed deposit or in Liquid funds. Don't touch it unless it is an emergency (Loss of employment, Medical expenses, etc.)

30% EMI Rule: (for not becoming a slave to money)

• Do not exceed 30% of your monthly income for payment of EMIs. Banks may offer more - but if you have to escape the rat race, then it is important not to have too much of your income going towards EMIs. 

100-Age Rule: (How much risk can be taken on the investments)

• Subtract your age from 100 to see how much exposure to equity you could take up - of course this differs from person to person based on the risk appetite too. 

10x Rule: (for Adequate Life Insurance)

• Always secure your life to at least 10 times of your annual income so that "Continuance of Income" to the family is assured in case of your absence. 

Rule of 72-114-144: (How money multiplies)

• To know how many years it takes for your money to double / triple / quadruple, simply divide 72, 114 / 144 respectively by the rate of interest. Alternatively, these also signify the effect of inflation in reducing the value of money by 1/2, 1/3 & 1/4 too in that many number of years. 

25x Rule: (for Retirement corpus)

• You should accumulate a corpus of at least 25 times your inflation adjusted annual expenses at the time of retirement to be tension-free.