6 Golden Rules Of Investing which you Should Know Before Starting Investment. If you are planning to start your Investment journey then you must start it now. Ace Investor Warren Buffet also follows this concept. If You haven’t started Investment till now then you don’t have to worry. Investment is like Learning. There is no age of learning. If you are starting investing then you must know about these 6 rules. These 6 Rules will always help you in wealth creation.
1- 50-20-30 Rule
This Rule is very Clear. This is the Basic Rule of Investing. In this Rule, you have to Divide your Income into 3 Parts. First 50% save for your Necessary Needs. 20% for needs that you will require on a frequent basis. And the rest is 30% of your Investment.
2- 15-15-15 Rule
This rule will help you in Wealth Creation. In This Rule, you have to invest Rs 15,000 per month for 15 Years in assets which gives 15% Returns. This type of return you will get in Direct Equity i.e. Stocks. It is Because Despite so many ups and Downs Stock market easily generated 15% CAGR Returns in Long Run.
3- Rule of 72
This rule tells that in How Much Time Your Money will be doubled. To use this Rule you have to Divide your Interest rate by 72. Suppose your Investment gives you 15% returns then you have to divide this by 72. and you will get that 4.8. It means that your investment will be doubled in 4.8 Years.
4- 114 Rule.
114 Rule will let you know in how much time your money will be tripled. For Example, Your Investment Assets give a 15% CAGR Return. Divide 114 by 15 and you will get 7.6. This means your Investment will get Tripled in 7.6 Years.
5- 144 Rule
This rule takes your Investment to a new level. This rule tells us In how Much Time our investment will become four times. You have to divide 144 by the Rate of Interest. For Example, Your Investment gives you a 15% CAGR. Divide this by 144 and you will get 9.6 Years. It means your investment will become 4 Times in 9.6 Years.
6- 100 Minus Current Age
This is Used to Determine What Assets you should Invest in. Subtract your Current age by 100. The Number you will get as your answer is how many percents you will have to allocate in Equity. This rule says that the Lesser your age more you can take the risk and create wealth. The loss which you will incur during this time will be recovered from this.
The above Six Rules are the Golden Rules of Investing. These Rules will always help any Individual in Wealth Creation.
If you are thinking of Investing in Stocks this article would be a great help. The complete guide to investing