If I could learn just 6 Finance rules in my life, these would be it:-
[1] 4% withdrawal rule:
- For every INR 100 of savings, you could spend INR 4. And, your money would stay the same.
- Provided you can grow your wealth at 10%+.
- Math: Assume inflation @6%, your money grows at 10%. So net you are making INR 4 on INR 100 savings.
[2] Rule of 15*15*15:
- If you invest 15K monthly.
- At 15% growth.
- For 15 years.
It becomes 1 Cr.
If your investments beat inflation, you grow your wealth
If your investments DO NOT beat inflation, you do not grow your wealth.
[3] 70% savings rule:
- If you are able to save 70%+ of your salary
- For 10 years
- And, do not undertake lifestyle inflation
Then, you can theoretically retire [that's the rule, I am not saying savings 70% is easy].
Practical step would be: start out by saving 10% of your salary. And, then with time, move to higher % of salary saved.
[4] Improving your earning potential is the best investment:
- Money making = adding value.
- Hence, the more skilled you are (at any trait), the more value to can add. And, the more money you can make.
- Best part, if you are skilled, you save your own time.
[5] Time >> Money
- Theoretically, we can make infinite money.
- But, all of us have finite amount of time (and we don't even know how much).
- So keep meetings shorts, avoid unnecessary drama, cut toxic people; and don't waste your time and other people's time.
[6] If you can't afford to buy something twice, don't buy it once
- In the world of easy EMIs, we could own a lot more than we can potentially afford
- If you stressed about your purchases. Then ask a simple question: can you afford to buy this twice, without any major stress?
- If the answer is a NO, then wait a little. With time, comes clarity.
Which rule did you like the most?
