Few thumb rules help in financial decisions-
1) 100 minus our age should be our equity allocation.
2)Minimum 10 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 yrs.
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.