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Investing Thumb Rules



Personal Finance is highly subjective and you can not have the single thumb rule which will apply to all the individuals. But there are certain thumb rules which can give you a some idea about how to act while investing. 
 
Though it is not advisable to depend solely on these thumb rules, it is always desirable that you take the help of financial adviser before taking any decision.
 
Here is the list of some commonly used thumb rules into the field of personal finance.
 
1) 100 minus our age should be our Equity allocation.
2) Minimum  20 times of our yearly income should be our Retirement fund.
3) We all should Save minimum 30% of our income: 
4) Cost of our House should not be more than 6 to 8 times of our family income.
5) EMI should not be more than 35% of our gross monthly income. Zero is the best answer.
6) Rate of returns ideally should beat inflation.
7) Rule of 72 & 115......

How many years double or triple our money ?
* 72/Returns = Double in yrs
* 115/ Returns = Triple in yrs.
 
8) Rule of 70 = Future buying power of your money.
*70/Inflation= Number. of Years.
 
9) Life cover should be  Minimum 8 to 10 times of your yearly income.
 
10) We should keep 3 to 6 months expenses as an Emergency Fund.
 
Moral- 
People want shortcuts, that's why thumb rules find some place. But it is always desirable to take the help of financial adviser before taking any financial decisions. The above mentioned thumb rules might give a clue but not the exact answer to your queries related to financial planning. In the world of finance there is no "One size fit to all".




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