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Chapter 12 — HOW MUCH MONEY SHOULD I INVEST?
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HOW MUCH MONEY SHOULD I INVEST?

HOW MUCH MONEY SHOULD I INVEST?

It is a common question, so let's start with the minimum and then the maximum. 

Minimum: A good minimum to get started is $1,000. Remember, you can save $100 a month for 10 months to get started.  

Example

Our CEO's initial capital was a shy $2,000, which he had earned from selling ice cream all summer, but you could even start as low as $1,000. Since he started investing when he was 14 he didn’t really need the money and saved most of his income. He could also apply more risk to his portfolio, as he didn’t care if he lost any of his money. After that, he continued to save most of his income and put it into the market. 

 

SUGGESTED SAVING SCHEDULE

[14 – 20yrs] – save 40% – 70% of your part-time salary

While in college, it’s hard to save but keeping your money in there is good enough. You’re actually still investing but in human capital. If college tuition of $40,000 lands you a job that pays you $12,000 more, annually, it would definitely be considered a good investment.

[22 – 30yrs] 10% of your salary (You still need to have some fun)

[30 – 50yrs] 15%

[50+yrs] 20%

HOW MUCH MONEY SHOULD I INVEST IN STOCKS?

When it comes to how much money you should invest, it really comes down to your goals and your resources. Generally, younger individuals who are investing for long-term goals, such as retirement, should invest about 65-80% of their savings in stocks, ETF's, or mutual funds. The remainder should be invested in less risky investment options such as bonds and treasury notes. As you near retirement age it is wise to gradually switch investments to a lower-risk portfolio with fewer stocks and more bonds.

Example of our CEO

HOW MUCH MONEY SHOULD I INVEST?

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