How Much of My Income Should I Invest?

how much of my income should i invest retirement stock investing

Although the average job supplies you great benefits such as a retirement plan, it seems as if these benefits are nothing more than a form of attraction to bring in workers. When it comes to retiring and having enough money, most people still struggle financially and must reconsider retirement plans. 

At this point, you need to help yourself and seek other methods such as investing. You may wonder, "How much of my income should I invest?"

If you are ready to start putting money aside and invest it, read this quick guide to help you decide how much money you should invest when you're getting started. 

How Much of My Income Should I Invest?

When you're starting off in the investment market, you want to play things safe as you learn how the field works. A generous way of starting would be to follow the 10% rule of thumb. If you have more savings you can afford to invest, you can go up to 15-20%, but never more than that. 

The last thing you want to do is gamble your money when you are new to the game. If you don't have enough money in your savings, you can also add your 401(k) account as a percent of savings towards your investment plans. 

Think About Your Goals

When you are deciding how much money to invest, you also want to keep your goals, both short- and long-term, in mind.

Do you want to be able to retire by a certain age? Do you want to get out of bad debt quicker so you can avoid crazy interest fees? Do you want to start a business later down the road? 

Sit down and create a plan on when you would like to receive the money to reach your goal. Be reasonable with your goals and the time it will take you to get there.

The best investment returns occur when you allow the money to multiply when you don't touch it. Resist the temptation to use the money you make too early. 

Invest Wisely

You also need to find out where you want to put the money you invest. New investors can take advantage of low-risk investment opportunities by investing their money in safe stocks. Although this does mean you may not receive high-returns, you can still make a generous amount of profit and lower the percentage of losses. 

Entry-level investors can signup with companies like Acorns, M1 Finance, or Robinhood. Many of these investment apps provide tools and tips to help you gain insight and knowledge. 

Don't Let Your Money Sit Around: Invest It 

Creating a saving plan is a good idea because you always want to have some money available during emergencies. However, you shouldn't let ALL your money sit around and collect dust.

You can earn more money with the money you already have by investing some of it. It's common to be wary about starting. You will always ask yourself, "How much of my income should I invest?" before you make a move. Take action to create a change to be another step closer to financial freedom after you have an idea of how much to invest

If you found this article helpful, check out the rest of our website for informative blogs that can help you save money. Visit the Investing section of the Frugal Finance Blog to learn more about making the most of your income, savings, and retirement accounts.