One of the most asked questions on the internet world What Percentage of Money to invest?
At the end of a tiring day, we all sit back and worry about our future, making retirement plans, planning vacations with the family and enjoying life without financial constraints. If you are pondering over all this like us, it means that you are thinking about saving and investing.
Well, we can certainly say that you are not alone because these days, with high inflation rates, everyone is thinking about saving and actively investing in programs that will yield good profits.
But how much should you save? And how much should you invest?
Don’t worry, we got you. In this blog, we will tell you about the percentage that you should save and percentage that you should invest.
1: Plan your goals Money to invest
The most important step is to plan your goals and believe in them. Before anything else, believe in yourself that you will pull it off. You can achieve this goal by hook or by crook.
Developing a Savings Plan
Firstly, start with simple steps like developing a savings plan. It can be a short-term saving plan up to three years, or a long-term saving plan for five or ten years. Then practically decide the amount you want to save and why you want to save.
Find Motivation to Save in Your Reasons
There can be a number of reasons why you want to save money, focus on them because it will give you motivation and consistency to save. For instance, you want to save for vacations, house decoration, personal grooming etc. or you want to save for goals such as; getting a car, buying a house, education or retirement. All these goals are tangible and practical.
Create a Mind Map
When you have found your motivation and have made up your mind on saving, then create a mind map of savings plan. Focus on these goals and set an amount you will need to fulfill these goals. For example, if you are buying a house and the down payment is $40,000 then you will have to save at least a $1000 per month for three to four years. If you put your mind to it, you will achieve this goal.
2: Start Budgeting Money Should You Invest
After you have created a mind map of your plans, start budgeting. Create a list of your expenses and income. Follow 50/30/20 rule to budget your income, in which the 50% of your income goes to all the house bills, 30% of your income goes to your personal stuff such as clothes, food, entertainment and 20% of your income will be saved each month. Just follow this budgeting plan religiously and you will be amazed how much amount you will save in a couple of months.
Don’t Budget Around Monthly Expenses
A common problem people face when planning a budget is that, they make a saving plan around monthly expenses. It means that they spend on their monthly expenses and then save what is left. For example, if someone makes an average of $6000 a month, most of the salary will be spent on bills, fee, payments, fuel, food, entertainment, and clothing etc. At the end that person will be left with some hundred dollars at maximum or might not be able to save anything at all.
Monthly Expenses Are Not Static
Budgeting around monthly expenses is an incorrect approach because monthly expenses are not static. They fluctuate and with that your saving plan will fluctuate as well. Sometimes we have a mind map of monthly expenses but then life throws something out of the blue; like your car broke down or your house needs some renovation etc. Therefore, it will become easy if you maintain your monthly expenditure around savings plan. In this way, no matter what the expenses are, you would have already saved a determined amount.
3: Investment Money Ideas
Once you have a plan in your head regarding your income, you might want to invest this money to secure your goals furthermore. Investment is necessary to generate more wealth and gain stability.
But what is an investment?
Investment basically means putting your money in a place that will generate profits. It is said that 15% to 20% of your income should go into investments. In this way, you will have more income over a period of time.
Money to Invest in Stocks
You can invest money in stocks but you have to keep in mind your risk profile and how much risk can you take. You have to go thoroughly through all the stocks and their details, connect with brokers who will guide you further so that you don’t end up losing money.
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Money to Invest in Real Estate
Apart from stocks, You can also think about money to Invest in property. Property has always been the safest investment option because two types of investment are involved in it. Firstly, you buy a property such as a house. Its value will double over the years which is a great investment. Also, you can rent the property which will also give you some good amount every month, which is another profitable investment. However, obviously, you will have to save big enough amount to buy a house because the property is not that affordable.
Conclusion
With the inflation rates going up every day, a percentage of money should be saved every month to secure future goals and avoid financial instability. After developing a savings plan and careful budgeting, there are many options for investment such as stocks, shares, cryptocurrencies, property, and small businesses. The main goal should be to generate profits along with a monthly salary.
