Published : 27 September 2023
By : Sachin Gupta
In this method, you deduct your fixed expenses such as utility bills, rent, food expenses, etc. and invest the rest.
In this, you spend 50% of your income on necessary expenses, 30% on your wants, and the rest 20% is invested. From this 20%, based on your preferences, you can invest in a SIP of your choice.
In this method, you decide on a certain percentage such as 5% or 10% of your income to invest in a SIP. However, do consider portfolio diversification and invest as per your risk appetite.
Goals can be short-term (buying a car) or long-term (buying a house). You can decide to divide income for this goal in a ratio of 50:50. Note that this is an investment amount, already separated from income, i.e. 20% of your income if the 50:30:20 rule is followed.