Planning Investments for 2025? Master These 5 Formulas, Including the 50-20-30 Rule

If you’re planning to begin your investment journey in 2025, it’s essential to focus on two critical factors: time and returns on investment. The longer you stay invested, the higher the returns you can expect.

To achieve your financial goals with minimal risk, it’s important to plan strategically. Think about the amount you aim to accumulate in the future and align your investments accordingly. Here are five effective investment formulas that can simplify your planning and help you make informed decisions.

The 50-20-30 Rule

This straightforward rule suggests dividing your income into three parts:

• 50% for household expenses.
• 20% for short-term needs.
• 30% for investments to meet future goals.

By following this approach, you can maintain a balanced budget while securing your financial future.

The 15-15-15 Rule

Ideal for long-term investors, this rule involves:

• Investing ₹15,000 monthly for 15 years in assets that provide a 15% annual return.
  Equity investments are often suitable for this strategy, as the stock market has historically delivered 15% returns over the long term despite short-term volatility.
  

The Rule of 72

This rule helps calculate the time it takes to double your money. Divide 72 by the expected return rate to find the duration.
For example, if your SIP offers a 15% return, dividing 72 by 15 gives 4.8 years, which is the time required to double your investment.

The Rule of 114

To determine the time needed to triple your money, divide 114 by the expected return rate.
For instance, with an annual return of 15%, dividing 114 by 15 gives 7.6 years to triple your investment.

The 100 Minus Age Rule

This rule guides asset allocation. Subtract your age from 100, and the result is the percentage of your portfolio that should be invested in equities.
The logic is simple: the younger you are, the higher your risk tolerance, as you have more time to recover from potential losses.

By understanding and applying these formulas, you can plan your investments effectively, ensuring a secure and financially sound future. Start 2025 with a clear strategy and make your money work smarter for you!