HOW MUCH TO INVEST?
One of the primary questions that new investor usually facing – to determine primary funds, which means - what the amount of money should I invest?
For many types of investments, a certain initial investment amount will be required. Hopefully, you’ve done your research, and you have found an investment that will prove to be sound. If this is the case, you probably already know what the required initial investment is.
Unfortunately, a lot of first-time investors think that the best way - to invest all of their savings in purpose to receive the bigger income. This is a dangerous mistake! It is the best way to loose all your savings in one moment! Remember - your risks equal to your investment! “Don’t put all the eggs into one basket” – it is still wise thought…
In general, financial consultants recommend to invest not more than as much as 15-20% of your total savings, but it may vary depends on type of investment. Anyway, never invest all you have!
As your first step, check closely how much money you can currently afford to invest. Do you have savings that you can use? If so, you a lucky! However, remember - you don’t want to cut yourself short when you tie your money up in an investment.
It is important to keep 6-12 months of living expenses in a readily accessible savings account – don’t invest that money! Don’t invest any money that you may need to lay your hands on in a hurry in your close future. Unless you have funds from another source, such as an inheritance that you’ve recently received, this will probably be all that you currently have to invest.
One more important step in determination how much money you should invest - determine your financial goals. Is it for a long-term investment (such as retirement or children education in the future) or short-term one (buying house or new car at 3-years period). That will indicate what kind of investment tools you should use. Use the advice of your financial planner, so you can be sure that you are not investing more than you should – or less than you should in order to reach your investment goals.
Next important planning step is to determine how much you can add to your investments in the future. If you are employed, you probably will continue to receive certain income, so you can plan to use some part of that to build your investment portfolio over time. Talk to a qualified financial planner to set up a budget and determine how much of your future income you will be able to invest.
And one more – and the most important – never (but NEVER!) borrow money to invest (sub-prime…sub-prime!), and never use money that you have not set aside for investing! If the money that you have available for investments does not meet the required initial investment, you have to look at other investments.
Don’t go to any investment proposition “by any price” – remember – there is always will be another opportunity!
