Let’s be honest—managing wealth effectively is both an art and science.
Even professionals earning seven figures can feel like they’re falling behind when it comes to growing, preserving, and spending wealth wisely.
There are a million opinions, investment strategies, and fads out there.
Some work. Many don’t.
But, there are a few timeless money rules that have been backed by research and can act as guiding principles for building and managing wealth.
In this article, I'll break down 10 of them—how they work, their real-world applications, and what you need to watch out for.
What it means: This rule is a quick mental shortcut to estimate how long it takes for an investment to double based on a fixed annual return. You simply divide 72 by the return rate.
Example:
Think 10% sounds too unrealistic?
The MSCI World Index, a global stock market benchmark, has historically returned around an average of 10% per year. This means, if you'd invested $10,000 in it back in 1975, you’d be sitting on $1.7 million now.
So, the Rule of 72 highlights the importance of investing in the great companies of the world and the awesome power of compound interest.
p>Caveats: While useful for estimating, this rule assumes a steady return, which isn’t always realistic. Markets fluctuate, and past performance doesn’t guarantee future results. But over decades, growth is happening and the magic of compound interest is visible (even if our brains aren’t wired to understand exponential growth).
What it means: This rule is a general guideline for asset allocation between stocks and bonds. It suggests subtracting your age from 120 to determine a percentage of your portfolio should be in equities.
Example:
This is a useful tool to help you remain diversified throughout your investing life and a simple formula to balance risk and reward.
Caveats: While your investment allocation should change with age, this isn't all you should consider: market conditions and personal risk tolerance should also factor in. The rule also doesn't apply for wealthier families who can use a more optimal system of structuring their affairs with a well-sized 'war chest' of bonds to get them through periods of volatility to maximise the growth of their 'family fortress' held in equities.
What it means: This is a simple budgeting rule to help manage income effectively.
It suggests allocating:
Example:
If you earn $1,000,000 a year, the breakdown would look like this:
Why does this rule work so well?
It fights our natural "present bias"—our tendency to prioritise immediate rewards over future benefits.
By dedicating a specific portion to saving, you're making your future security non-negotiable. If you aren’t already tracking your spending, do it for a month and see how close you are to this split, and adjust as needed. Find out more on this rule here.
Caveats: The rule is great for general financial discipline, but may not apply to high-net-worth individuals, where investment allocations might be far higher than 20%.
If this sounds like you, try flipping the rule on it's head, and see what this does to your results:
What it means: If you want to know how long it will take to triple your money instead of doubling it, use 114 instead of 72. Simply divide 114 by your expected annual return.
Example:
This rule is useful for long-term wealth planning. If your goal is to 3x your wealth before retirement, this helps set realistic expectations.
Caveats: Like the Rule of 72, it doesn’t account for economic downturns, inflation, or taxation.
What it means: This rule gives a rough estimate of expected returns from different asset classes. Remember it this way.
You can expect a:
Example:
This rule helps set realistic expectations based on how you choose to invest or hold your money. The difference between the expected returns compounds over the years to create huge differences. It also highlights potential red flags (if someone promises 20% guaranteed returns, run in the opposite direction).
Caveats: Market fluctuations mean no return is truly guaranteed. Remember that these are long-term averages before inflation. Whilst cash may feel safe, inflation tends to entirely erode the value of cash holdings. Any specific year or even decade can vary significantly from these long-term averages.
What it means: This retirement rule of thumb suggests that withdrawing 4% annually (adjusted each year for inflation) from a portfolio should make savings last at least 30 years.
It also gives you a clear target for how much money you need to retire comfortably.
There are two ways to look at it:
Example:
A survey by Fidelity found that people who follow the 4% withdrawal rule are more likely to achieve their retirement goals.
Caveats: This rule works best with a diversified portfolio. Market downturns can impact withdrawals, so flexibility is key. This rule originated from the "Trinity Study" in the 1990s and has been refined over time. Some financial planners now recommend a more conservative 3-3.5% withdrawal rate, especially for early retirees. As ever, it depends on current economic conditions. Read more about this rule from Amazon best-selling author Andrew Hallam.
What it means: This rule provides a way to estimate how long inflation will take to halve the purchasing power of money. Simply divide 70 by the annual inflation rate.
Example:
Or to put it another way:
Inflation silently erodes wealth and damages your future purchasing power and ultimately, your life opportunities. Money languishing in cash or in low interest accounts is slowly and steadily being eating away, every day, by termites.
Caveats: Inflation rates fluctuate and can spike unexpectedly (as seen in recent years).
What it means: According to this rule, you should have life insurance coverage worth 10-15 times your annual income to protect dependents. This is especially important for senior international professionals who have others depending on their income.
Example:
High-net-worth individuals often have complex financial commitments, from mortgages on multiple properties to private school fees, long-term investments, and business ownership stakes. A well-structured life insurance policy ensures your family doesn’t face a financial crisis in the event of your passing, allowing them to maintain their lifestyle and manage inherited assets effectively.
So, review your policies to ensure proper coverage, considering factors like inflation, existing assets, and estate taxes to ensure adequate coverage.
Caveats: Personal circumstances (debts, lifestyle, investments) may mean you need more or less than the standard guideline. Work with a financial life manager to assess your specific needs.
What it means: We've already looked at doubling and tripling investments. But what about quadrupling?! This lesser-known compounding rule helps us with just that. Simply divide 144 by the interest rate.
Example:
This is a useful long-term wealth projection tool. It rewards those who stick to the 3 behaviors all successful investors need: time, patience and discipline. Many people invest for 5-10 years and are disappointed with the results. But those who stay invested for 20+ years, often see life-changing growth.
Caveats: Like other compounding rules, it assumes steady returns.
What it means: This is an excellent decision-making framework which helps you consider how a financial decision will impact you in 10 minutes, 10 months, and 10 years.
Example:
You want to buy a brand new, luxury car. Before committing, ask yourself:
This rule helps curb impulsive spending and highlights the importance of delayed gratification, helping you break down your thoughts into short-term, mid-term, and long-term perspectives. It's also a great one to teach to children.
Caveats: It doesn’t work well for urgent decisions.
Money rules like these aren’t just theoretical—they can be powerful tools for guiding financial decisions.
While no single rule is perfect, understanding these principles can help you grow and preserve wealth in a structured way.
The key?
Apply them wisely, adapt them to your own situation, and always consider the bigger picture.