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This rule came from the era where the points — the fee paid to lenders for making the loan — and closing costs associated with a mortgage refinancing took years to pay off. Today, there are many available mortgages with little or no closing costs.

As a result, consumers can get long-term savings by shaving half a percentage point or more from the mortgage, or by keeping the rate but shortening the loan’s duration.

The consensus of the experts: Work the numbers. You could be wasting money waiting for rates to fall further before you make a deal.

Critics say this is a longtime insurance industry marketing ploy, while supporters call it an honest benchmark. Either way, it’s usually off-target; a key problem, again, is the focus on income rather than expenses.

Experts say the five-times-income rule applies to the sole breadwinner in a family with two kids. That makes it inadequate for larger families and a waste for people yet to start a family. Like most financial rules of thumb, this rule’s suitability is a function of your personal situation.

Rather than relying on income, a more accurate formula for many consumers will be to insure what they can’t afford to pay for without coverage. That means taking their mortgage balance, the kids’ college education and four or five years’ worth of expenses to allow your loved ones to get back on their feet emotionally.

This is a fuzzy interpretation of the famous Ibbotson-Sinquefield stock market study, research that showed the stocks deliver an annualized average return of 10%. The problem is that Roger Ibbotson, the guy behind the study, now says that he expects the next 25 years to be different from the past 75, with returns closer to 8%.

Moreover, the 10% number includes several assumptions, such as a long time horizon, no active trading, no taxes and no transaction costs. That’s hardly the real world.

Also, many people forget that the historical returns are an average, not an annual total. When people live by this rule and make it their expectation, they tend to be disappointed, which makes it tough to stick to an investment strategy.

Not a bad idea, but too many critical factors are being ignored (again). Retirement needs are a function of life expectancy, good or bad health, inflation and spending, not previous salary. Living a jet-set lifestyle requires a lot more money than staying home and watching television; failing to generate enough income can force retirees to give up activities that would make their retirement years more enjoyable.

“Most folks who hit 65 these days — if they wait that long to retire — are finding that they have more energy and more desire to do more things, and they need to plan on a higher level of spending in the early years of retirement,” says Rick Brooks, the vice president of investment management for Blankinship & Foster, a Solana Beach, Calif., advisory firm.

“Sixty-five is the new 55, where folks still have energy, they have resources and they are no longer shackled by the 9-to-5-job thing. While those conditions will change over time, someone who doesn’t replace all of their income may draw down too much early and then may be in a position where they outlive their assets.”

his isn’t really a rule, according to experts, so much as a starting point. It’s hard to put a number on “the right percentage” to save because that ignores several factors, such as the return the money can earn, how long someone has to build a nest egg and the lifestyle someone wants to maintain.

If this rule gets people to save — even if they can’t afford to get all the way to 10% of income — then it’s better than nothing.

But if you follow this rule expecting it to deliver a secure retirement, you may be sorely disappointed.

Advisers have struggled with this one for years because an investor can spend years trying to save six months’ salary, and then keeping that money liquid for emergencies surrenders big growth potential.

A better rule might be to focus on living expenses rather than gross income. That would allow an emergency fund to cover its intended purpose: paying the bills, not replacing lost paychecks. The necessity of these funds can depend on a variety of factors, including disability insurance protection, the availability of credit and the potential costs a family would face from a job loss, health problems or the breakdown of cars or big-ticket household appliances.

Chances are, the average consumer will never face an emergency that requires him or her to come up with six months’ salary within 24 hours, which is why some advisers suggest that emergency funds can do double duty, being an investor’s most conservative bond investments while being accessible if the worst happens.

These are just some random cost saving tips I thought of so I shall write it here.

1. Save electricity on Air-conditioners

Use curtains or shares to block sunlight from entering the room directly through glass windows. Clean your air conditioners filters regularly as well. This reduces the workload of your air conditioners, and thus help save that bit of electricity.

2. Save electricity on refrigerators

Shift your fridge away from heat generating appliances (eg. Stove or cooker). Another common method is to close your fridge immediately once your open and grab your stuff. You don’t want to let too much cold air out, and hot air into the fridge.

3. Using your Local library to get more information before spending to learn.

This is a common tip I used to do, when I want to acquire new knowledge. There are simply tons of books in the library, and wealth of knowledge that we can read up on. There are always people who love to take out money before realizing that the knowledge they are paying for are available in the library.

Remember, these little tips can add up to lots of amount after a long time.

The answer is the percentage of your investments that should be in stocks or stock mutual funds.

This rule became popular in the 1970s and ’80s with the emergence of retirement plans, as individuals tried to come up with a handle on asset allocation without necessarily trying to conquer the subject matter.

In practice, this rule is severely flawed, failing to look at the whole picture. Everything from life expectancy to age at retirement, from amount invested to expected returns and much more, affects a portfolio’s ability to last a lifetime. Most advisers seem to think this rule is ultraconservative and would be more comfortable if the number were readjusted to 130 or 140.

“This rule has completely outlived its usefulness because people are retiring younger and living longer,” says Peg Eddy of Creative Capital Management in San Diego. “People are retiring with 20 years or more to live, and a portfolio that is too conservative just isn’t going to work for them. They need more growth, or they will be too vulnerable to inflation over that longer stretch of time.”

These are just some random cost saving tips, similar to those from the first post.

1. Buy used or second hand stuff

Look around your house, and you will realize some stuff lying around are simply… old but still useful. We don’t always need new stuff, so let’s make good use of old stuff. If you don’t mind, I hope there’s a second hand shop somewhere around your neighbor, with tons of stuff ready for a second life. Buy them and it could save you quite a bit. (eg. My 2nd hand Kawai upright grand piano cost $4,200, but the original price is tagged around $16,000).

2. Keep a list of items and their prices

Keeping in mind what’s the price of an item helps, if you are not sure of the “usual” price of an item. If you know them well, or keep a list, you can easily compare and contrast as to why an item is sold higher than other places, or lower. There maybe 10 products that serves the same function. It is therefore wiser to choose the cheapest, unless it differs with some extra functions you need.

3. Calculating the lifespan of a product

It is frustrating to buy a shoe that costs $50 and it lasts less than 2 years wearing out at the sole or breaking away. While a pair of shoes that cost $150, it could last for at least 6 years. I remember there’s a brand called “Caterpillar” which produces very high quality yet lightweight shoes. If you can “estimate” the lifespan of a product you are buying, I would rather you spend slightly more money to get one that lasts. (eg. IT gadgets, quality apparels)

Remember, these little tips can add up to lots of amount after a long time.

For those of you who owned several credit cards, there’s something called annual fee, where you get the banks to waive your your credit card charges. To waive, you have to call in to the Credit card department, and have a customer service officer to attend to you, and help you to waive it off.

This is a procedure which I (a poor fellow like me) will have to do a few times each year, because I owned a few of them. Imagine the fee for 1 card is $150, that will amount to almost $1000++ because for each and every card, regardless of whether its same type of cards but on Visa/Mastercard, or if its from the same bank, it is still treated as single one. Furthermore if you have a supplementary card, that comes into account too.

My tip here is for you to write down the number of cards you have, and the due date for the fee. Keep track of it so that you know how many cards you owned, and roughly when to call in and waive the fees.

One of the ways credit card companies earn $ from you, is when you forget about this fees, and you simply pay it by auto deducting from a bank account. I know a few rich guys who simply have no time to be bothered with a few thousands dollars (heck, that’s like 1 % of their monthly income!)

So keep track your ins and outs !