How much should I set aside every month for investments and how much to save? I'm still quite young and don't make that much money, but I do want to set myself up for the future instead of letting what I earn sit there and lose value
Hello Queenbellevue, I suggest that you learn how PERSONAL FINANCE works. I found a very easy-to-follow guide that will answer your question. it's C-D-R-W. C stands for Cash Flow - you have to make sure that you have a stead flow of income enough to cover your monthly expenses and you have enough for savings as well. then you may want to get part-time work to increase your cash flow.. and your savings as well. D is for debt management. make sure to pay your debt if any or manage it well by paying those small debts and then to the next until you have cleared everything. R is for risk management. this means you have to make sure that you keep an emergency fund, get yourself a insurance incase anything happens. finally, the W is for wealth management. if you have steady cash flow, zero debt and have enough emergency savings and retirement funds (etc), you may consider some of your cash to be invested in a business, or in stocks or mutual fund.. etc. to know more about this, you can just google the cdrw personal finance topic for more elaborate answer and explanation.
There is no hard and fast answer. I've always liked the axiom: earn all you can earn, save all you can save, invest all you can invest. The first is maximizing your income potential. The second is being disciplined in savings. The latter is self-explanatory. If you don't have a budget yet, make one, and stick to it. Figure out how much you can earn and start building that war chest.
How much to invest and how much to save are almost the same question. I suggest making a monthly income/expense budget and sticking to it, that way you see how much you have left over each month. First step is a small cash reserve.. anything from 2 to 6 months of expenses depending on your job security etc. Then when that cash reserve is there you can and should invest all of the extra money you have in hand at the end of the month.
For investing? Depends on what kind you wish to do... you might be able to get some funds from your bank for no commission so then it really doesn't matter but if you use a broker then usually around $500 would be the minimum so that the fees don't take too much out of your capital.
If you can sacrifice a little extra while young and healthy - live relatively frugally, earn as much as possible, and wisely invest as much as possible as often as possible - you'll do very well. If you can put away $100 or more a week or even $100 a month every week or month, you'll be a winner in the end.
Sorry, but could you expand on this a little bit? The reason I'm asking is because I used to be involved with an MLM thing based around the stock market, and at one point I checked on what the cost of transfering those stocks to my actual bank account would be, and it was just outrageous.
A lot of banks have their own mutual funds. Not really great for everyone since usually the management fees are quite high.. these are basically the ones the banks investment advisors keep pushing for their customers. This is how I started out actually, I had an automatic investment plan that would take X euros from my account each month and invest it into different mutual funds of my choice. Zero commission. I know a lot of people who do this since with no commission they can simply invest what they have at the end of the month.
Investing with banks can be really dangerous, we had the a major bank collapse in my country (BES), no one thought that was possible, but it happened and everyone lost their money.
