How much money should I invest?

FinanceTrading / Investing

  • Author James Galloway
  • Published June 11, 2010
  • Word count 464

Although most first time investors think they should invest all of their savings, this isn't necessarily the case! In order to work out how much money you should actually invest, you should first determine how much you can actually afford to invest and what your goals are for your finances.

So to start with, let's first see how much money you can currently afford to invest. Have you got savings you can use?? If you have then that's great! But you need to be careful because you don't want to leave yourself short on funds when you do tie your money up in an investment. So think of what you were planning to use your savings for? And can you actually afford to use them and have them tied up in investments.

You really must look at the next three to six months and keep enough money aside for living expenses for this time period, and have those funds easily accessible in a savings account. Do not invest this money!! Do not invest any money that you may need for emergencies or general day to day living. You need to have this money in a readily accessible account so that you can access it in a hurry should you need to.

So firstly work out how much money you should leave in your savings and how much you can afford to use for investing. For now, this may be all the money you currently have to invest, unless you have inherited any money.

Then try and calculate how much money you can add to your investments in the future. If you have a solid income and are employed, you may be able to set aside some of this income to build up your investment portfolio over time. Always seek professional advice from a financial planner, and they will also be able to help you budget for this and calculate how much of your income you can afford to invest. With the help of a financial planner, they will be able to make sure that you do not invest more or less than you can afford to and also guide you in the best route to reach your financial goals with investing.

Most investments require a minimum amount for the initial investment. But if you have done enough research and found an investment right for you, you will probably know what this initial investment amount is going to be.

Never borrow money for investments, and only use funds that you have specifically set aside for investing. If the money you have for investing does not meet the required amount for the initial investment of the investment of your choice you may have to shop around a bit more for other investments that you can afford.

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