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9 Personal Finance Rules we all must know

9 Personal Finance Rules we all must know | Dhanguard

Personal loans in the UAE are now the most popular form of short-term credit. People wish to obtain a personal loan in order to obtain credit cards for large expenditures such as travel, the purchase of large business assets, shopping, meeting expenses such as weddings, and so on. In this case, please contact us at Dhanguard for assistance with Personal Loan in UAE.

There are nine personal finance rules that everyone should be aware of:

  1. Rule of 72 (Double Your Money)
  2. Rule of 70 (Inflation)
  3. 4% Withdrawal Rule
  4. 100 Minus Age Rule
  5. 10, 5, 3 Rule
  6. 50-30-20 Rule
  7. 3X Emergency Rule
  8. 40℅ EMI Rule
  9. Life Insurance Rule

What Is the Rule of 72?

The Rule of 72 is a simple formula for calculating how long it will take for an investment to double given a fixed annual rate of interest. Divide 72 by the annual rate of return to get a rough estimate of how long it will take for the initial investment to pay off.

How does the 72 Rule Work?

For example, the Rule of 72 states that $1 invested at a ten percent annual fixed interest rate will grow to $2 in 7.2 years ((72/10) = 7.2). In reality, a 10% investment will double in 7.3 years ((1.107.3 = 2).

For low rates of return, the Rule of 72 is reasonably accurate. The chart below compares the numbers provided by the Rule of 72 to the actual number of years required for an investment to double.

Number of years required to double your money at a given rate, U just divide 72 by interest rate. For an Example, if you want to know how long it will take to double your money at 8% interest, divide 72 by 8 and get 9 years.

  • At 6% rate, it will take 12 years
  • At 9% rate, it will take 8 years

Rate of Return

Rule of 72

Actual Years

Difference of Years









































What is the Rule of 70?

The Rule of 70 is a concept that will assist investors in calculating the returns on their investments, as it provides an estimate of how long it will take for an investment to be doubled. It will calculate a rough estimate of the investment period required to double the amount invested. It is also dubbed the "Doubling Time" of an investment.

Divide 70 by current inflation rate to know how fast the value of your investment will get reduced to half its present value. Inflation rate of 7% will reduce the value of your money to half in 10 years.

Working of Rule of 70

The Rule of 70 is a simple math equation that you'll use to determine how many years it will take to double your investment. When applying the "Rule of 70," make sure you have the investment's annual growth rate.

  • First, determine the annual growth rate of the investment.
  • Subtract 70 from the annual growth rate.
  • As a result, the number of years required to double the investment will be determined.
  • 70 / Annual Growth Rate of Investment = number of years required to double your investment

What is the 4% Rule?

The Four Percent Rule is a guideline for determining how much a retiree should withdraw from a retirement account each year. This rule aims to provide the retiree with a consistent income stream while also maintaining an account balance that allows income to flow throughout retirement. Experts are divided on whether the 4% withdrawal rate is safe, given that the withdrawals will primarily consist of interest and dividends.

  • 4% Rule for Financial Freedom
  • Corpus required = 25 times of your estimated Annual Expenses.
  • Eg- if your annual expense after 50 years of age is 500,000 and you wish to take VRS then corpus with you required is 1.25 crore.
  • Put 50% of this into fixed income & 50% into equity.
  • Withdraw 4% every year, i.e.5 lakhs.

This rule works for 96% of time in 30 years period

What is 100 Minus Age Rule?

The 100-minus-age rule is a popular piece of advice that encourages investors to invest a portion of their net worth in bonds. The rule is as follows:-

Subtract your age from 100, and the result is the percentage of your portfolio that should be in stocks. This rule is used for asset allocation. Subtract your age from 100 to find out, how much of your portfolio should be allocated to equities

Suppose your Age is 30 so (100 - 30 = 70)

  • Equity : 70%
  • Debt : 30%

But if your Age is 60 so (100 - 60 = 40)

  • Equity : 40%
  • Debt : 60%

What is 10, 5, 3 Rule?

Though there are no guaranteed returns for mutual funds, according to this rule, long-term equity investments should expect 10% returns and debt instruments should expect 5% returns. And 3 percent is the average rate of return on savings bank accounts.

One should have reasonable returns expectations

  • 10℅ Rate of return - Equity / Mutual Funds
  • 5℅ - Debts ( Fixed Deposits or Other Debt instruments)
  • 3℅ - Savings Account

What is 50-30-20 Rule?

In practise, the rule is very simple. It requires you to divide your take-home pay into three parts. 50 percent of income is spent on necessities, 30 percent on desires, and 20 percent on savings and investing. As a result, you will have set buckets for everything and will be operating within the allowable amount for each bucket.

  • The 50-20-30 (or 50-30-20) budget rule is an easy-to-follow strategy for helping people achieve their financial goals.
  • According to the rule, you should spend up to 50% of your after-tax income on necessities and obligations that you must have or fulfil.
  • The remaining half should be divided as follows: 20% for savings and debt repayment, and 30% for anything else you desire.
  • The rule is a template designed to assist individuals in managing their money and saving for emergencies and retirement.

 About Allocation of Income to Expense

Divide your income into:

  • 50℅ - Needs  (Groceries, Rent, EMI, etc)
  • 30℅ - Wants / Desires (Entertainment, vacations, etc)
  • 20℅ - Savings  (Equity, MFs, Debt, FD, etc)

3X Emergency Rule

Maintain an emergency fund that is at least three times your current monthly income. For individuals with a non-permanent job, the fund value should be 6-12x. The same is required to keep you financially stable in emergencies such as job loss, travel, medical bills, and so on. Always put at least 3 times your monthly income in Emergency funds for emergencies such as Loss of employment, medical emergency, etc.

  • 3 X Monthly Income
  • In fact, one can have around 6 X Monthly Income in liquid or near liquid assets to be on a safer side.

40℅ EMI Rule

As a general guideline, the EMIs on all of your loans should not exceed 40% of your net income. This is referred to as the debt-to-income ratio. It will be easier to service your loans/debt if you stay to this percentage. Borrow just what you can afford to repay comfortably. If you have many loans, it is best to combine them into a single loan with the lowest interest rate and return it on a regular basis.

  • Never go beyond 40℅ of your income into EMIs.
  • Say if you earn, ₹ 50,000 per month. Then you should not have EMIs more than ₹ 20,000 .
  • This Rule is generally used by Finance companies to provide loans. You can use it to manage your finances.

Life Insurance Rule

The income-based rule of thumb is a popular way to simplify decisions about how much life insurance you need because it is simpler and faster to calculate than more complex methods, such as ones that include all of your income and assets, debts, and future earnings. When life insurance agents conduct an analysis for a client, they arrive at a proposed death benefit designed to meet basic needs, which tends to be around ten times your salary.

  • Always have Sum Assured as 20 times of your Annual Income.
  • 20 X Annual Income
  • Say you earn ₹ 5 Lakhs annually, you should at least have 1 crore insurance by following this Rule.
  • These rules are equally useful for young, youth and old. Hope you will find them simple, useful and handy.


Personal loans are currently the most popular kind of short-term financing in the UAE. People want to get a personal loan so they can get credit cards for big purchases like vacation, significant company properties, shopping, and meetings like weddings. In this scenario, get in touch with Dhanguard and our team for help with a Personal Loan in the UAE.


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Frequently Asked Questions

Personal loans that are taken from banks are automatically insured at a nominal fee and in the event of any premature demise the partner insurance company covers the entire loan amount, protecting the family from any financial risk.

Assets are not required as security against your personal loan.

Normally, the only advance costs pertaining to a personal loan are dispensation and insurance fees.

According to the issuer's policy, some lenders enable the borrower to 'defer' or postpone a month's payment once every few months. To take advantage of these benefits, the borrower must make timely payments. Deferred payments do not reduce the principal amount, and hence will not lower the lowering personal loan interest rate in UAE.

Top-up or add-on personal loans are renewable loans that can be used to supplement an existing loan after the borrower has paid a certain number of payments. Top-up personal loans in the UAE are used to reward loyal, non-delinquent borrowers by providing longer tenors or reduced interest rates, depending on the bank's policy.

No, unless the bank expressly states otherwise or the student has a guarantor, a student cannot apply for this loan. The loan's eligibility restrictions include a minimum monthly salary and a maximum age range of 21 to 65 years. Some lenders may require a salary transfer and confirmation of employment with a lender-approved organization. However, some lenders offer personal loans in the UAE without requiring a company listing. As a guarantor, you can always apply for a student/education loan.

It would be up to you to decide. You should be informed that you must pay the loan's EMI from the beginning of the month, followed by the disbursal. You can take out a loan if you're confident that you'll be able to pay the monthly EMIs at the very least.

If you're having trouble paying your loan EMI, contact your bank to see if there's anything you can do. If you try to avoid the problem, it will only get worse. Banks will issue warnings before dispatching debt collectors. If you do not respond, they may designate you as a defaulter and may even take you to court for the unpaid personal loan in UAE. As a result, it is preferable that you call the bank and explain your circumstances. They may be able to lower your EMIs in some cases.

Almost all personal loans include a life insurance plan for applicants. This insurance coverage protects the borrower from having to make payments in the event of a fatal disease, permanent incapacity, or death. Some personal loans in Dubai also include life insurance plans that pay back the entire loan amount to the policyholder's family members in the event of the policyholder's death.

A personal loan can be used to pay off credit card debt. By consolidating the debt, the loan might assist in the payment of the credit card bill. When compared to credit cards, it has lower interest rates. Even if the applicant has a personal loan minimum wage of AED 2,000, you can return the loan in easy monthly installments over the following few years.

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