A luxury flat, SUV, holiday tour abroad and at least ₹1 crore in bank balance are everyone’s dream. However, only a few realise such kind of dreams and the remaining ‘unlucky’ lot end up thinking these are possible only for those born rich. Whereas most financial experts believe proper planning is all that is needed to become rich. Of course, financial planning could be a labyrinth of calculations and choices that might seem to be difficult to understand, but if you get a grip on the patterns and formulae, passed on by financial experts, it’s much easier to attain financial freedom. Let’s catch up with the numbers.
15*15*15 Rule
Not just the super-rich, even a salaried individual can accumulate ₹1 crore if he/she follows the 15*15*15 Rule. Save ₹15,000 a month for 15 years continuously, without any single default in monthly savings, in a 15% CAGR generating mutual fund. If he/she wishes to continue the same for another 15 years, he/she would have saved a whopping ₹10.5 crore. The magic lies in compounding and consistency is the key.
Rule of 72
It’s a simple trick or a calculation to find out how long it will take for your investment to double at a fixed rate of return. To find the number of years, just divide the number 72 by the interest rate you will receive on your investment. For instance, if you receive 6% interest per annum, money doubles in just 12 years (72/6). Not just this, with this formula, you can calculate the ideal rate of return if you want to double investment in certain number of years.
Say, for example, if you want to double investment in four years, you should get 18% interest per annum. Just divide 72 by the number of years.
Rule of 114
The Rule of 114 is much like Rule of 72 and tells you when investment triples. Just divide 114 by the annual interest rate received to find out how many years you need for wealth to grow threefold. If interest per annum is 6%, money triples in 19 years (114/6). If you want to triple investment in just five years, you should get 22.8% interest per annum (114/5).
Rule of 144
This Rule tells you when your investment quadruples in value — just a simple division.
50/30/20 Rule
Budgeting is crucial to the country and to individuals as well. It might be quite complicated with limited resources and vast goals; however, the 50/30/20 Rule comes in handy to make the budgeting process easier and sustainable. Divide net-income (after tax deductions) into three major categories: 50% for essentials such as rent or housing EMI, groceries, medicines, utilities etc.; 30% for wishes such as entertainment, tour, shopping etc. and balance 20% for savings and debt repayment. Some financial experts add the debt repayment in the first 50% category leaving the 20% category only for savings.
100 Minus Age Rule
The most fundamental question in personal finance is on asset allocation. That is, how much money is to be allocated to buy risky assets such as stock markets and how much should be parked in conservative investment products. The 100 Minus Age Rule answers this dilemma. As per this rule, one must subtract his/her age from 100 to determine the percentage of equity portfolio, and the rest allocated to low-risk assets or traditional fixed/recurring deposits. If you are 30, 70% (100–30) of your investment can be in equities, and 30% in bonds, FDs, or other debt funds.
However, this rule cannot be taken blindly and just gives a fair idea. A young man who is the breadwinner of his family with more commitments can’t invest 70% in equities, whereas a septuagenarian pensioner without commitment and is well taken care by children, can invest more in equities.
10X Insurance Rule
The 10X Rule helps an individual calculate the amount of life cover his/her dependents would require in his/her absence. As per this Rule, the term life insurance cover should at least be 10 times his/her gross annual income. However, this rule has its own limitations and might not be suitable for everyone. The Rule doesn’t consider factors such as age, specific family needs, number of dependents etc.
While these number-based thumb rules are shortcuts to crack the code of complicated personal finance decisions, one size doesn’t fit all.
So, care must be taken while taking important financial decisions.
(The writer is an NISM & CRISIL-certified Wealth Manager)
Published – July 14, 2025 06:03 am IST
