These 5 Simple Rules Can Simplify Your Financial Planning

Sound financial planning doesn’t have to be complicated. By following a few easy-to-remember mathematical rules, anyone—from beginners to seasoned investors—can make smarter money decisions. These five thumb rules can help you understand how money grows, the impact of inflation, and how much risk you should take.

1. Rule of 72 – Know How Fast Your Money Doubles

To estimate how many years it will take to double your investment, divide 72 by your expected annual return rate.

• For example, if your investment earns 8% annually, it will double in 9 years (72 ÷ 8 = 9).

This rule helps you set long-term goals and understand the power of compound interest.

2. 100 Minus Age Rule – How Much to Invest in Stocks

To decide your asset allocation between equity (stocks) and debt (bonds), subtract your age from 100.

• If you're 30 years old: 100 - 30 = 70, meaning you can allocate 70% to equity and the remaining 30% to safer assets like debt instruments.

This ensures you take higher risks when younger and gradually reduce exposure as you age.

3. 40% EMI Rule – Control Your Debt

Your monthly loan EMIs should not exceed 40% of your monthly income.

• If you earn ₹1,00,000 per month, your total EMI obligations should be less than ₹40,000.

This helps you maintain financial stability and ensures that you’re not over-leveraged.

4. Rule of 70 – Understand Inflation’s Impact

To determine how long it will take for the value of your money to halve due to inflation, divide 70 by the inflation rate.

• At a 7% inflation rate, your money's purchasing power halves in 10 years (70 ÷ 7 = 10).

This underlines the importance of investing in inflation-beating instruments rather than letting money sit idle.

5. Rule of 144 – How Long to Quadruple Your Money

If you want to know how long it will take to make your investment four times its value, divide 144 by the annual return rate.

• With an 8% return, your investment quadruples in 18 years (144 ÷ 8 = 18).

This rule emphasizes the benefit of patience and long-term investing.

Bonus Insight: Inflation Is Currently Low

In May 2025, India’s inflation rate dropped to 3%—the lowest in six years. This creates a favorable environment for investors, as lower inflation supports better real returns on savings and investments.

Conclusion

These five financial rules offer a powerful framework to guide your investment decisions, manage risk, and plan for the future. Whether you’re saving for retirement, a house, or your child’s education, applying these simple rules can help make your financial journey smoother and more rewarding.