How Much Money Should I Invest Every Month?

Investing is an excellent way to grow your money and build wealth, but it can be hard to figure out how much you should devote to this purpose each month.

This post will help you determine how much money you should be investing every month for financial stability.

The good thing about investing today is that you can start with a little or a lot. There used to be a time when the minimums for investing were unreachable for everyday people. Not today! Once you have determined how much disposable income you have, you can then allocate a portion to investing using one of the options below:

Micro-Investing 

Micro-investing allows you to get started with just your spare change. Yes, that’s right, you can begin investing without having the barrier of thinking you don’t have enough money. You connect your bank account, set your investing goals, choose which investments and you set the amounts you want invested. Some will withdraw automatic small amounts if you select that option. Many of the apps also have educational components as well so you can learn while you earn! 

Online Brokerage

You can start investing with an online brokerage account and set up recurring deposits weekly or monthly. Most do not have minimum requirements so you can start with whatever you have.

Employer Retirement

This is your 401(k), 403(b) or TSP Savings Accounts provided by your employer. You can generally start with any percentage, but many companies have matching requirements. For example, if you contribute 1%, they may not match until you are contributing 5%. Others match any amount you contribute each pay. Either way, do what you can afford and are comfortable with. There is nothing wrong with starting low, just get started!

Begin to eliminate debt before you invest heavily. Many people want to invest before they are ready. If you have debt and want to pay it off while investing, start with contributing a small percentage in your 401(k) or other company retirement account as mentioned above. Do not try to max it out until you have paid off more of your debt. Investing is part of your overall financial strategy, a piece of the pie.

For Example: Rob has $30,000 in total debt and no 401(k). He has $350 left over monthly after paying bills. He should focus on using that surplus on paying down his debt but could also put 3-5% of his income in his employer’s retirement account. He can set a goal to increase the amount once he has paid off half the debt ($15,000) and max out his contribution when it’s paid off. He can also consider mutual funds or other investing each month now that he has more disposable income.

Many of the barriers to investing have been long gone with the elimination of account minimums and development of easy, online brokerage accounts. You can invest at any income level from the comfort of your home. The amount is really determined by your financial goals. Don’t be intimidated by the terminology, educate yourself little by little and ensure your personal finances are in order so you can build wealth strategically with investing.

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