The Magic Formula, developed by Joel Greenblatt, calculates a stock's attractiveness by ranking companies based on high Return on Invested Capital (ROIC) and high Earnings Yield (EY). The strategy ranks companies (1 for best) in each metric, sums the ranks, and buys the lowest combined scores.
The formula is built on two calculations. First, earnings yield, EBIT divided by enterprise value. This tells you how much profit a business produces compared to its size and valuation. Second, return on capital, EBIT divided by net fixed assets plus working capital.
Magic formula investing is a rules-based strategy designed to surpass the average market returns by ranking stocks based on price and capital returns. The method was developed by Joel Greenblatt and focuses on large-cap stocks, excluding small caps, financial, utility, and foreign companies.
How is a magic number calculated? Games remaining + 1 - (losses by second-place team - losses by first-place team) = magic number. A team's magic number represents the combination of wins needed by that team and losses by its closest competitor that would result in that team mathematically-clinching a playoff spot.
The 1089 math trick works by taking a 3-digit number (with first and last digits differing by at least 2), reversing it, subtracting the smaller from the larger, and then adding that result to its own reverse, which always yields 1089 because the process isolates multiples of 99, and the final addition is equivalent to 99×1199 cross 1199×11.
The "27.39 rule" (often rounded to $27.40) is a simple financial strategy to save $10,000 in one year by consistently setting aside $27.40 every single day, making it an achievable micro-saving habit to build wealth or an emergency fund. It turns the daunting goal of saving $10,000 into a manageable daily action, emphasizing consistency over large lump sums.
Warren Buffett's 8+8+8 Rule is a concept for a balanced life, suggesting dividing your day into three equal 8-hour segments: 8 hours for work, 8 hours for sleep, and 8 hours for yourself (personal growth, family, health). While it emphasizes smart work and rest for productivity, critics note real-life factors like commuting and chores can make perfect balance challenging, but the core idea promotes intentional time management for well-being and success.
Joel Greenblatt's Magic Formula: ~20–30 Stocks
Rationale: Empirical evidence shows that a diversified portfolio of top-ranked value stocks outperforms the market over time, but still requires a reasonable spread to reduce individual company risk.
Magic formula investing is a rule-based disciplined investing strategy to help investors understand value investing theory in a simple manner. He simplified the methodology of stock picking by listing stocks based on their price and return on capital.
The 7-3-2 rule is a financial strategy for wealth building, suggesting it takes 7 years to save your first major financial goal (like a crore), then accelerating to achieve the next goal in 3 years, and the third goal in just 2 years, leveraging compounding and disciplined, increased investments (like a 10% annual SIP hike). It highlights how returns compound faster over time, drastically reducing the time needed for subsequent wealth targets, emphasizing patience and consistent, growing contributions.
If Warren Buffett had $10,000 today, he'd focus on finding overlooked, high-quality small companies (small-caps) at attractive prices, buying them as businesses, not just stock tickers, and letting compound interest work over a long period by starting early and reinvesting dividends, much like he did in his early days, emphasizing fundamental value over market hype.
To make $3,000 a month ($36,000/year) from investments, you need a significant lump sum or consistent, high-yield income streams, with estimates ranging from roughly $300,000 at a 12% yield to over $700,000 for stable Dividend Aristocrats, depending on your investment type, dividend yield, risk tolerance, and strategy. A simple formula is: Investment Needed = ($3,000 x 12) / Annual Dividend Yield.
I tell young people all the time, by the time you hit 33 years old you should have at least $100,000 saved somewhere. Make that your goal. That's the age when it's really time to start getting FOCUSED on saving.
Ramsey's tweet puts into perspective how easy it is to lose track of your spending when done in small amounts. Many people don't realize how quickly those "little" purchases can add up. $13.70 a day may not feel like much, but when multiplied by 365 days, you've spent $5,000 on things you likely didn't need.
The 6174 number trick, also known as Kaprekar's Routine, involves taking any four-digit number (with at least two different digits), arranging its digits to form the largest and smallest possible numbers, and subtracting the smaller from the larger; this process, repeated, always converges to the constant 6174, a phenomenon named after Indian mathematician D. R. Kaprekar.