How much should I invest?
The most important place to start is to work out your budget - taking into account all of your income and expenses. It's a simple exercise that's not meant to restrict you or your lifestyle, but empower you to have confidence in what you can spend and how much you can invest.
Balance your budget
Income includes salary, bonuses, benefits, rent received, distributions, dividends, an inheritance or redundancy payments. Against this you can plot your fixed outgoings such as rent, mortgage, insurances and services, and discretionary purchases.
Find easy budget cuts
You would be surprised how much you spend on discretionary purchases, like buying lunch every day, coffees or magazines. There are usually some easy budget cuts and trims you can make to save money, like bringing lunch to work.
Don't deprive yourself
You don't want to deprive yourself of the things you most enjoy, otherwise your budget will be hard to stick to. It's better to be realistic about what you can sacrifice.
Leave an investment margin
It's not a good idea to plan to invest all of your available money. Allow a margin to cover unexpected expenses. You can always top up your investments if you have some extra cash.
Get investments automatically deducted
If you don't know it's there, you can't spend it. You can have your regular investments automatically deducted from your bank account each month. It's an easy way to maintain the discipline of regular investing.
Learn more about Starting to invest
- How much should I invest?
- How much investment time is need?
- Can I get my investment money out?
- How do I build an investment portfolio?
Did you know?
You probably won't achieve your goals unless you set realistic and achievable investment time frames.
Building an investment portfolio takes time and planning and should involve professional advice.
