Investing today is no longer confined to a few avenues. From fixed deposits and mutual funds to equities and government-backed schemes like PPF, the choices are more varied than ever. But the greater the access, the greater the need for simple and dependable principles to help make long-term financial decisions. These six rules help as handy reference points for planning, comparison of options, and risk understanding.
Rule of 72: How long it takes to double money
The Rule of 72 estimates how many years it will take for an investment to double at a constant rate of return. The formula is straightforward: divide 72 by the annual interest rate.
For example, an FD offering 7 per cent interest will take more than 10 years to double (72 ÷ 7 ≈ 10.3 years). A deposit with IDFC First Bank at this rate follows the same logic: The power of compounding becomes much starker at higher returns. An equity mutual fund tracking Nifty 50 has historically been delivering close to 12 per cent annually, which would double an investment in about six years.
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Rule of 114: Time needed to triple investments
This tip parallels the spirit of the Rule of 72, but it's all about growing wealth triple-style. Take 114 and divide by your expected return.
At 7% annual return, your money might triple in approximately 16 years. At 12%, the tripling could happen in under a decade. That makes it a helpful guide toward long-term goals, such as retirement planning.
Rule of 144: Estimating fourfold growth
For longer horizons, the Rule of 144 estimates how long it takes for money to quadruple. At 7%, that would be approximately 21 years. With 12%, it's closer to 12 years. It's a helpful way to frame picturing wealth building across decades.
Rule of 70: Understanding inflation’s impact
Inflation is the rate at which your purchasing power reduces over time. A measure of how quickly this happens is given by the Rule of 70: Divide 70 by the Inflation Rate.
5% inflation means that, roughly, money loses half of its value in 14 years. That's why returns must be higher than the rate of inflation to preserve real wealth.
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The 110 rule: Age-based asset allocation
There is a rule of thumb for asset allocation: subtract your age from 110, and that is how much of your portfolio should be in equities, while the remainder is in debt. - Someone who is 30 years old now would still keep about 80% in stocks. A 50-year-old might drop to about 60% in equities as one way of balancing growth with stability.
The 3-6 rule: Emergency fund basics
This rule requires three to six months of living expense savings in liquid instruments. It ensures financial continuity during unforeseen events without disrupting the long-term investments.
{News Ei Samay does not provide investment advice anywhere. Investment and trading in the share market or any field involve risk. Proper study and expert advice are recommended beforehand. This news is published for educational and awareness purposes.}
