#733 - How Much Should I Invest A Month?: Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to answer the question, “How much should I invest a month?” This is a really good question and honestly, I think it comes down to...

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#733 - How Much Should I Invest A Month?: Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to answer the question, “How much should I invest a month?” This is a really good question and honestly, I think it comes down to...

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Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to answer the question, “How much should I invest a month?” This is a really good question and honestly, I think it comes down to probably just using a very basic guideline for your investing. But I would say that at a bare minimum, you want to be investing 10% of your take-home pay per month into long-term investments, retirement, whatever buckets you want to distribute that. I think 10% is probably the baseline case. Could you do more than that? Of course. Could you do less than that? You can, but you probably won’t be at the place you want to be financially as quickly if you did less than 10%. If you are let’s say bringing home $50,000 a year and that’s your income, then over the course of the entire year, you probably want to save at least $5,000 or figure out how to save $5,000 which is $416, $417 per month. That would be a really, really good target. I would start there and then I would start to scale up from that point. We’ve talked about on the daily podcast before and on the weekly podcast a number of times, this idea that many investors, especially new investors starting out, are really fixated on the return of their investments. But when you start, what’s more important is actually, your savings rate. Your savings rate is more of a dictator of how well your investments will perform over the first say 15 years of a 30-year period and after that first 15 years, then and only then do the tables turn and now, investment returns become more important than savings rate. But a lot of people haven’t even gotten to that point yet where they have enough saved up that the compounding effect of an extra marginal 1% or 2% on their investments actually really is noticeable and works for them. What’s more important right now, especially if you’re just starting to build your nest egg and your net worth, is actually increasing your savings amount. A 1% or 2% increase in how much you save per year can go dramatically further than if you were to invest a little bit less money and earn 1% or 2% more on that money. That’s not going to go as far just yet. It’s both savings and investing and earlier on in your investing cycle, again, like the first half of it really of your usable timeline of investing, the first half of it is really geared towards savings. The back half is where investment returns matter more. Not that they don’t matter in the beginning, but they matter more at the back half. Hopefully this helps out. As always, if you guys have any questions, let me know and until next time, happy trading.
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