Skip to main content

 Rules of Wealth Creation-1


1) *Rule of 72*

No. of yrs required to double your money at a given rate, U just divide 72 by interest rate

Eg, if you want to know how long it will take to double your money at 8% interest, divide 72 by 8 and get 9 yrs

At 6% rate, it will take 12 yrs

At 9% rate, it will take 8 yrs

2) *Rule of 70*

Divide 70 by current inflation rate to know how fast the value of your investment will get reduced to half its present value.

Inflation rate of 7% will reduce the value of your money to half in 10 years.

3) *4% Rule for Financial Freedom*

Corpus Reqd = 25 times of your estimated Annual Expenses.

Eg- if your annual expense after 50 years of age is 500,000 and you wish to take VRS then corpus with you required is 1.25 cr.

Put 50% of this into fixed income & 50% into equity.

Withdraw 4% every yr, i.e.5 lac.

This rule works for 96% of time in 30 yr period


Labels:

Comments

Post a Comment

Popular posts from this blog

10 Retirement Mistakes

 TOP 10 Retirement Mistakes 1.      49% people are under estimating the impact of Inflation. 2.     46% people are under estimating, how long they will live? 3.     42% people are over estimating Investment Income. 4.     41% people are investing too conservatively. 5.     40% people are setting unrealistic return expectations. 6.     39% people are forgetting healthcare costs in life span. 7.     35% people are failing to understand Income sources after              retirement. 8.     33% people are relying too heavily on public benefits. 9.     23% people are under estimating Real Estate                                     (Property) Costs. 10.   21% people are investing too aggressively without           ...
Post a Comment
Read more

VALUE - Your Economic Value

  Human Life Value (HLV) It is an income of summations as on date, presuming balance income to be earned in future till the Age of Retirement. How Human Life Value is calculated? There are two methods to calculate Human Life Value (HLV) 1) Income Replacement Method 2) Need based Method 1)    Income Replacement Method: Whatever income is used to support the family has to be replaced through Life Insurance to protect Future Income. 2) Need based Method Amount required to fulfill the family future needs and goals in the event of demise of the earning member.
Post a Comment
Read more
                                           Life Insurance and MF (Mutual Fund):  If One is Chalk, the Other is Chees e   Life insurers often use the slogan, “Sab se Pahele Life Insurance".  "सब से पहले जीवन बीमा ”. For the last few years, the Mutual Fund (MF) industry has been using a slogan more vigorously, “Mutual Fund Sahi Hai.”  "म्यूचुअल फंड सही हैI" Both Life Insurance and Mutual Funds are reasonably powerful in the financial planning industry. Let us understand the distinct nature and purpose of these two. Life insurance is meant for managing risks associated with the life of individuals, in case they die prematurely or live too long. Mutual fund is meant for increasing the wealth of individuals through pooling of investable funds. While both focus on some kind of fund pooling, the objectives are entirely different. ...
Post a Comment
Read more