Money Basics: Financial rules of thumb
There are several well-known financial rules of thumb that provide guidance for investors. Here are some examples commonly used in the States.
- Save at least 10-15% of your take-home income for retirement.
- Have at least five times your gross salary in life insurance death benefit.
- Pay off your highest-interest credit cards first.
- The stock market has a long-term average return of 10%.
- You should have an emergency fund equal to six months’ worth of household expenses.
- Your age represents the percentage of bonds you should have in your portfolio.
- Your age subtracted from 100 represents the percentage of stocks you should have in your portfolio.
- A balanced portfolio is 60% stocks, 40% bonds.
For much more visit DIY Investor.net.