How Much Should I Invest?

To decide how much to invest, you should know what your goals are, and how much you can afford. This means setting a budget! So, how do you actually set your budget? Try these steps:

1. Set your goal, and when you’d like to achieve this by
2. Calculate your earnings minus typical expenditures
3. Commit a portion of what is leftover to savings, to go to an emergency fund or short term goals like buying a car, or going on holiday
4. Put a bit of cash aside for a “fun fund”, to pay for little luxuries like a meal out, or some new jeans
5. Whatever is left you can afford to put into investments!

Plug your investment budget into a compounding interest calculator to see how much you could make in the time frame you had set, setting the return at about 6% per year, which is what the stock market has returned on average over the past 20 years. Based on the results, feel free to adjust your budget as needed.
This is a great starting point for knowing how much to invest. Remember – Never invest what you couldn’t afford to lose.

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