The Most Universal Investing Thumb Rules

When it comes to investing, universal thumb rules can be like shortcuts that help with the investing process. It can also help you to determine how your capital could appreciate.

Here are the 8 most universal thumb rules used in the world of investing:

1. The emergency fund rule: One can put at least 3-6 months' worth of essential living expenses in an instrument which is safe, easy to access and could also earn you some interest.

2. The 100 minus your age rule: Want to know how much you should invest in equities? Just deduct your age from 100; the result arrived is the percentage you can invest in equities, and you can invest the rest in other asset classes such as debt or gold, etc.

3. Pay yourself first rule: Always invest for yourself and your future self first. The bills and online shopping can wait.

4. Rule of 72: This shows how long it would take for your money to double. Divide 72 by the interest rate or rate of returns of your investment option, and you'll get the number of years it could take for your money to double in value.

5. Rule of 114: This shows you how long it can take to triple your money. You need to divide 114 by the interest rate at which your income is compounded.

6. Rule of 144: This tells you how long it can take to quadruple your money using the same formula as mentioned above.

7. Rule of 70: Even if you don't spend or invest a single penny, its value will diminish. This rule estimates how fast the value is reduced to half of its present value. You need to divide 70 by the current inflation rate.

8. The 4% withdrawal rule - If you expect your retirement portfolio to outlast, stick to the 4% withdrawal rule, which can help you a income source as a retiree. At the same time, the balance amount can continue to earn returns.

Past Performance may or may not be sustained in the future.

Aditya Birla Sun Life AMC Limited /Aditya Birla Sun Life Mutual Fund is not guaranteeing/offering/communicating any indicative yield/returns on investments.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.