Being happy is important, but so is futureproofing that happiness. Although money doesn’t buy you happiness, it can certainly help to facilitate it. Investing can help you to ensure that you have the right provisions in place, but what percentage of your savings should you invest? Let’s take a look:
Let’s talk investment figures
Many first time investors think that they should invest all of their savings. But this isn’t necessarily true. To determine how much money you should invest, you must first determine how much you can actually can afford to invest and what your financial goals are.
Do you have savings that you can use? If so, great. However, you don’t want to cut yourself short when you tie your money up in an investment.
Securing an emergency fund
It is important to keep three-six months of living expenses in a readily accessible savings account. This cash should be your emergency fund and you shouldn’t invest that cash. As the first rule is; don’t invest any money that you may need to lay your hands on in a hurry in the future.
So firstly, determine how much should remain in your savings account to cover an emergency fund and how much can be used for investments. Unless you have funds from another source, such as an inheritance that you’ve recently received, this will probably be all that you currently have to invest.
Looking to the future
Next, determine how much you can add to your investments in the future. If you are employed, you will continue to receive an income, then you can plan to use a portion of that income to build your investment portfolio over time. Speak with a qualified financial planner to set up a budget and determine how much of your future income you will be able to invest.
With the help of a financial planner, you can be sure that you are not investing more than you should, or less than you should, in order to reach your investment goals.
For many types of investments, a certain initial investment amount will be required. Hopefully, you’ve done your research and you have found an investment that will prove to be sound. If this is the case, you probably already know what the required initial investment is.
If the money that you have available for investments does not meet the required initial investment, you may have to look at other opportunities. But never borrow money to invest and never use money that you have not set aside for investing.