If you're just starting out in investing or you're a veteran investor who is curious about how well they're doing, you'll find yourself asking if you invest enough money. Of course, the short answer to this question is that it depends on who the investor is and how much money they are willing to invest and risk on their portfolios.
Everyone makes different amounts of money and so their contribution amounts will be different. However, if you want to reach a certain amount of money in your investment portfolio in a certain period of time then you'll want to contribute a specific amount of money each month or week.
Additionally, if you want to abide by the different suggested rules that financial analysts usually layout for your money, it will be different as well. Find out how much money a regular investor should set aside each month.
Related Resource: Types Of Investors: Why Being Overconfident Can Cause More Losses
Invest by a percentage of your income
Most financial planners advise investing 10-15% of your annual income. This range of money is what planners advise because it's safe and because everyone can do it no matter how much money they make each year. Investing by income percentage is also done by many employers so that their employees can reap the benefits of investing their money.
You can invest it in the stock market and use https://analystratings.net/ to figure out what stocks are performing the best. Still, if you're looking to get into investing and you're not sure where to start, investing by a specific percentage you feel comfortable with might be the best way to do it. You can put away money each month without having to worry about it, and, at the same time, it shouldn't impact your livelihood too much because it won't be a lot of money you're investing.
If 10% is too much for you to invest, you can always start with a lower amount and start working your way up. You don't have to start investing money that you aren't necessarily ready to invest. Invest a percentage you're comfortable with and then start to work your way up the ladder as you feel comfortable. Some people, especially beginners, will prefer to use a managed investment account such as ChipX to make it easy.
Invest by a certain amount to reach a goal
Some people find that if they invest £500 a month, they'll reach a million pounds by age 65 and will be able to retire on it. While this is true in many cases, it's not the only way to reach a certain goal and a million pounds sometimes isn't enough to retire on. The point here is that you can reach a certain goal of a huge amount of money, after so many years, by investing the same amount of money each year into the same account. It'll add up and your returns will help you reach your goal.
It's important to make small, short-term goals as you work toward your long-term goals when you invest a certain amount on a goal-oriented basis. If you really do want to reach a million pounds, then first make a short term goal of £100,000 so you know what it feels like to reach your goal and how realistic a million pounds is for you.
You don't want to just start saving money and not feel as though you accomplished anything over the years. Investing by a certain amount is a great way to plot out a goal to reach, but make sure the goal amount you're aiming for can be broken down into smaller amounts.
Invest extra income
Many investors believe in investing any extra income they make. This could be money from a side hustle or second job. They put all of it into their investment portfolios on top of what they are already investing. This means that these kinds of investors don't have a specific number they're trying to hit each month because it changes. It means they are accumulating all of their extra money into their investment portfolios and making a nest egg.
This is a great way to go about investing if you constantly find yourself falling into extra money that you don't already have an idea for. You can throw it in your investment portfolio and not have to worry about it ever again. It's important to understand how to invest as a young person so that money will be there for you when you're older.
Of course we still want to live our lives and enjoy ourselves when we are young and in health, so there’s no need to be stringent with investing, but it should be a plan for the future and it’s a good idea to start young to reap the benefits of compound interest over the years to come.
More investing blog posts:
- Trading 212 free share worth up to £100
- How to get investment ready
- 3 ways to invest money from your sofa
- Do I need to own a home to invest in property?
- Easy ways to start investing for beginners
- 25% top up on LISA retirement savings
- Are Junior ISAs a good idea?
- How impact investments helps the world and the importance of donating