The idea of lottery-winning practically never leaves the mind of a mid-range income person.
Second comes the dream of making money even when we’re asleep.
But ironically, everyday, we make sure that our money is tucked in for a sound sleep while we ourselves struggle to survive another day in this sleep-deprived era. Let us clarify.
If you need a smoothie in the morning, you soak your oats and nuts at night. If you need a properly rested dough the next day, you put it to work before going to bed. So how exactly do you expect your money to do any better when you haven’t put it in motion while you rest?
It’s true, putting money to work isn’t an easier feat than putting a newborn to sleep. But, trust us, it isn’t that hard either when you know exactly what you’re doing.
To help you achieve your Richie-Rich dream, we have put together some golden rules of investing below straight from the books of billionaires & investment giants. Get in there!
Short & Simple - 7 Thumbs Rules of Investment
- Rule of 72: This rule estimates how long it takes for money to double. Divide 72 by the expected return rate for an approximate doubling time. For instance, at 10% return, money doubles in about 7.2 years.
- Rule of 114: Similar to Rule of 72, but for tripling money. Divide 114 by return rate for an estimate. At 10% return, money triples in about 11.4 years.
- Rule of 144: Like Rule of 72 & 114, for quadrupling. Divide 144 by return rate for an estimate. At 10% return, money quadruples in about 14.4 years.
- Minimum 10% Investment Rule: Start by investing 10% of salary, raise by 10% each year for compounding.
- 100 minus Age Rule: Subtract your age from 100 to determine equity-debt allocation. Example: At 30, equity 70%, debt 30%. Research before following blindly.
- Emergency Fund Rule: Keep 3-6 months of expenses as liquid emergency fund.
- 4% Withdrawal Rule: For retirees, withdraw 4% of retirement corpus yearly for sustainable income. E.g., with AED 10 million, withdraw not over AED 4 million/year.
Life is all About the Hard Choices
We know it sounds a bit tricky, but you just gotta risk it for the biscuit! This doesn’t mean you don’t make any thoughtful considerations on part of your income to investment ratio, or your financial objectives.
Always take the time to explore your choices, and consult with an investment advisor before making decisions.
Policybazaar UAE – Helping you navigate the wilderness of the insurance world!
Written by: Tashika Chopra
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