Determining How Much To Invest
Most first time investors believe that they should invest all of their savings. This is not necessarily true. To determine how much money you should invest, you have to find out how much you actually can afford to invest, and what your monetary goals are.
First, let’s see how much money you can presently afford to invest. Would you happen to have savings that you can use? If yes, great! But, you do not want to cut yourself short when you tie your funds up in an investment. What were your savings originally for?
It is vital to at least have three to six months of living expenses in a readily available savings account – do not use that money! Don’t invest any money that you may need to use in the future.
So, begin by determining how much of your savings should remain in your savings account, and how much can be used for investments. Unless you have money from some other source, like an inheritance that you have recently received, this will probably be all that you currently have to invest.
Then, figure out how much you can add to your investments in the future. If you are employed, you will continuously earn an income, and you can strategize to use a part of that income to build your investment portfolio over time. Speak with a skillful financial planner to set up a budget and find out 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’re not investing more than you should – or less than you should in order to reach your investment objectives.
For most types of investments, a certain initial investment amount will be needed. Hopefully, you’ve done your research, and you have found an investment that will prove to be legit. If this is the case, you probably already know what the needed initial investment is.
If the money that you have available for investments does not meet the required initial investment, you may want to look at other investments. Never borrow money to invest, and never use money that you have not set aside for investing!
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