Rule of 20

There's Rule of 72 and last year I posted about how much worth of shares you need to own to be able to produce P5 million worth of cashflow.

Now there's Rule of 20! While reading Robert Kiyosaki's book, The Real Book of Real Estate, one of his advisers, accountant Tom Wheelwright introduced the concept of Rule of 20.

Rule of 20 is a simple quick trick to estimate the "amount of wealth that it will take in order to create your desired cashflow." For example if you want P500,000 cashflow a year, you need at least P10 million. That's P500k (your desired cashflow) x 20. 

That's assuming that your wealth is earning a modest 5% returns a year or per period.