Post-Diwali is a time for a new beginning. In this latest episode of, ‘Money Money Money’, Mohit Gang, CEO and Co-founder of Moneyfront discussed some practical rules of investing, which will hold you in good stead no matter where you are in your investment journey.
Talking about rule 74, 114, and 144 Gang said, “There are some basic hacks in personal finance. Rule 72 tells you when your money will double, 114 says when your money will triple and 144 is a rule that says when you money will quadruple.”
Let's assume a 12 percent return on your investment, then the rule of 72 says that divide 72 by that rate of interest, and you will get the years in which your money will double. So, 72 divided by 12, which means in six years, your money is likely to double.
Now, let us say if the rate of interest is 10 percent and you divide 114 by that your money triples in 11.4 years. You divide 144 by 10 percent, your money quadruples in 14.4 years.
"So it's a very simple way and it can be used in the alternative fashion to compute the number of years and also to compute the rate of interest," Gang said.
On rule 70 which includes the impact of inflation, he said, “This is almost akin to the 72 rule. However, you are going the reverse way in this and you follow the rule of 70 for computing. A very simple thumb rule is you divide 70 by the rate of inflation, the number that you arrive at tells you in how many years will your money actually half in real word, or in real sense.”
On 4 percent rule, Gang said, “For someone who just wants to do a quick computation in mind to figure out retirement corpus, just apply the4 percent rule which is also called the Trinity rule.”
Watch video for more.