The 70:30 Rule in investment world!

Ever heard of the 70:30 Rule? It is considered one of the basic personal financial rules to follow.Put simply, this rule states that 30% of monthly income should be saved & invested, while the 70% can be used for expenses. While it may sound bit daunting at first, it is possible when we follow a consistent & focussed monthly budgeting & investment plan.Following this rule religiously can even help us to achieve our life's financial targets like retirement, fund for children's education early. However there are some who break this cardinal rule by actually saving and investing more. An investoholic/ Addictive investor may even try to save up to 50% of monthly income which is great!..The underlying principle here is that when you aim really high level of savings (say, 50%), you end up breaching the initial savings target of 30% of monthly income.This will lead to a positive cycle set in motion resulting in higher savings and early achievement of investment targets.A higher savings percentage combined with the power of compounding is a lethal combo! So, what is your personal savings/investment target- 70:30 or 50:50?!

Comments

  1. UnknownJanuary 1, 2020 at 8:07 PM

    Well said.. Will see if i can have the same followed in 2020

    ReplyDelete
    Replies
    1. Arun RaghavMay 20, 2020 at 5:27 AM

      The intention to save & invest is the first step!.My best wishes.

      Delete

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