Net Worth
Your net worth (Assets minus Liabilities) should be equal to your pre-tax annual income multiplied by age and divided by 10. Property or Inheritances, if any, should be excluded. If you are 60 and your annual income is Rs 12 Lakh, your ideal net worth should be 60×12/10 which comes to 72 Lakhs.
Emergency Fund
Most experts suggest an household needs to have a contingency fund up to six months worth of expenses to be used in the event of an emergency.
50/30/20 Rule
In this you must spend 50% of your disposable income in your Necessities (Essentials or Must haves), 30% in your Comforts (May haves) and 20% on your savings as a general rule. As seniors, you must enjoy the fruits of your life time savings, the rule may be changed to 50/40/10. The 10% savings may also be for short term catering for extra expenditure for your travels etc
Aim to double your portfolio about every ten years
In fact it only means getting an average rate of return of 7.2% per annum which is not very difficult to achieve. If you’re not even close to doubling after a decade, you need to re-balance your portfolio.
Portfolio Distribution
The percentage of your portfolio invested in bonds/FDs/safe investments should equal your age and those invested in risky investments should be not more than 100 minus your age. Like all thumb rules, this is not sacrosanct. Your investment in Mutual Fund/Equity may be varied if you want higher rate of return and have a higher appetite for risk.
Rule of 72, 114 and 144
Rule of 72: Number of years to double = 72/expected rate of return.
Rule of 114: Number of years to triple = 114/expected rate of return.
Rule of 144: Number of years to quadruple = 144/expected rate of return.
Using these thumb rules at 8% rate of interest 100 invested would double in (72/8) 9 yrs, triple in 14.25 yrs and quadruple in 18 yrs. Similarly, if you know the period in which the money doubles or triples, you can find out the rate of return with this thumb rule. If your money doubles 8 yrs, the rate of interest you are getting is (72/8) 9%.