Rule of 72, 50-30-20 and more: Do these classic financial rules still work?

In today’s tech-savvy world, investing is literally at your fingertips. With just a tap on your smartphone, your money can be working for you. With everything going digital, it’s easy to wonder: Are the age-old money rules still relevant today?

“Even in today’s changing financial landscape, the classic investing rules remain relevant,” says Mumbai-based tax and investment expert Balwant Jain. “While markets, products, and technologies have evolved, the core principles of disciplined saving, diversification, and long-term investing never go out of style.”

Here are 8 money rules all investors must know.

1. Rule of 72

The rule is simple: Just divide 72 by your investment’s annual return, and you will get the approximate number of years it takes to double your funds.

Example: If you want to know how long it will take to double your money at 12% interest, divide 72 by 12 and get the answer; in this case, it is 6. So, it will take six years for your investment to double, given the rate of interest is 12%.

2. Rule of 114

The Rule of 114 is a quick estimate used to determine how many years it will take for an investment to triple.

The rule is simple: Just divide 114 by your investment’s annual return, and you will get the approximate number of years it takes to triple your money.

Example: If you want to know how long it will take to triple your investment at 8% interest, divide 114 by 8 and get the answer; in this case, it is 14.25. So, it will take fourteen years for your fund to increase three times the invested amount, given the rate of interest is 8%.

Are the rules of 72/114 still relevant today?

"Rule of 72/114 will always remain evergreen, and one must know how to quickly calculate if you want to know in how many years your money will double/triple your money at a particular expected ROI. Or if you want to calculate the ROI if someone commits you that your money will double/triple in X many years. This really helps to quickly calculate and take a decision on investment once you derive the ROI on your investment using this formula," said Ronak Morjaria, Partner at ValueCurve Financial Services.

3. Rule of 144

The Rule of 144 is a formula used to estimate how many years it will take for an investment to grow to four times (quadruple) its original value.

The rule is simple: Just divide 144 by your investment’s annual return, and you will get the approximate number of years it takes to quadruple your money.

Example: If you want to know how long it will take to quadruple your money at 11% interest, divide 144 by 10 and get the answer; in this case, it is 13.09. So, it will take thirteen years for your fund to increase four times the invested amount, given the rate of interest is 11%.

4. The emergency fund rule

"While other rules still relevant are keeping an emergency fund equal to 3x or 6x of monthly expenses," added Morjaria.

5. 100-age rule

This rule is one of the most classic and straightforward guidelines for determining your ideal asset allocation, that is, how to divide your investment money between equity and debt funds.

Example: If age is 25, so (100-25 = 75)

Equity: 75%

Debt: 25%

If age is 50, then (100-50 = 50)

Equity: 50%

Debt: 50%

"But the 100-year-old should be your equity exposure is not very much relevant. The equity exposure will completely depend on an investor's goal, time horizon and risk appetite. A 50-year-old who has twice the retirement corpus that he actually needs, 10 years before retirement, can take risk and continue to have 60% or even more in Equity," said Ronak.

6. 50-30-20 rule

This rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings. This rule is incredibly easy to remember and implement without complex spreadsheets.

7. 4% withdrawal rule

This is a rough estimation of how much you can safely withdraw from your retirement corpus each year without running out of money (for about 25–30 years).

How it works: You withdraw 4% of your total retirement savings in the first year, then increase that amount each year to adjust for inflation.

Example: Let’s say you retire with a corpus of ₹2 crore.

Year 1 withdrawal: 4% × ₹2 crore = ₹8,00,000

Year 2: Adjust ₹8,00,000 for inflation (say 6%) ₹8,48,000

Year 3: Again, adjust for inflation, and so on.

This means your retirement savings of ₹2 crore could potentially last 25–30 years, depending on investment returns and inflation.

8. Life insurance

Your term insurance cover should be 12–15 times your annual income, depending on your life stage.

"If you are in the early stages of life or career, you should aim for a higher cover, as you have more financial responsibilities ahead. If you are older and your major responsibilities are already taken care of, you can opt for a lower cover," said Balwant Jain.

To estimate how much life insurance coverage your family needs if you pass away.

How it works: Start with your annual income – Take your current yearly earnings in ₹ (rupees).

Multiply it by 12–15 : This gives a rough idea of how much coverage your family would need to maintain their lifestyle and meet future goals.

Example: If your annual income is ₹10 lakh, your ideal life cover should be between ₹1.2 crore and ₹1.8 crore (12–18 times your annual income).

Whether it is calculating how fast your money doubles, budgeting wisely, or ensuring your family’s financial security, these classic rules of investing remain as practical today as they were decades ago.