How much should you ideally invest ?

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There are a lot of things you need to keep in mind before you decide how much you need to invest.

Insurance Cover:

You need to have adequate life insurance and health insurance cover to support your dependents in case of any crisis. If you have the burden of any loan, see to it that your insurance cover is adequate enough to finance the loan amount, otherwise the burden will be passed on to your dependents.

Contingency Fund:

Ensure that you have at least 3-4 months' salary kept aside in your contingency fund. In these changing job market conditions, your expenses will keep coming in, even if you have lost your job. In such cases, your contingency fund can help you survive for a period of time.

Ur Financial Goals:

Once you have checked with the above two options, the amount left in your hand is what you can invest. Invest more into equities for your long-term needs as it is greatly possible to be aggressive in such cases. Around 80 per cent allocation to equity schemes and the remaining 20 per cent in either or both debt and gold funds is what is advised to finance your long-term needs. For your short-term needs, mutual funds of short tenors can be adopted.

If you start to invest early, the probable chances of getting into a debt of a personal loan, credit cards etc. are reduced to nil, since you have finances to meet your requirements. Once you have structured your portfolio, the next thing is to review your asset classes and analyze their performances. If you think that the portfolio needs to be rebalanced, do so, only if there are drastic and long-lasting changes, which generally do not occur in most situations. But reviewing and rebalancing your portfolio once in a year is advisable.

Replies (7)

Komal Sharma

Assistant Accountant

1887 Points Joined October 2012

Thnxx a lot Sis............

for the informative n nice sharing..................

Deepak Dargad

Chartered Accountant....

9787 Points Joined June 2010

Once you have a good job and have begun to pay off your debt, it is time to begin investing your money. Investing your money is essential because it what allows you to amass wealth. It will open doors for you later in life. People who regularly save and invest are the ones who end up being wealthy. It is important that you trim your spending so that you can really begin moving forward and acquiring wealth. In order for investing to work, you should not pull money out of your investments, but leave them there to grow.

1. Are You Ready to Begin Investing?

It is important to make sure that you are truly ready to begin investing before you do. It does not make sense to begin investing money when you are charging money on your credit cards. You should be spending less than you make and be debt free, except for your house before you get serious about investing. However, you should still take advantage of employer match programs if you can.

2. Find a Financial Planner

The next basic step in investing is to find a financial planner. You will want to do your first investing in basic investing tools, such as mutual funds. Your financial planner should be someone who is willing to take the time to explain the different types of investments to you. She should be willing to look for products that you feel safe using, while offering the biggest potential growth. Your bank may have a financial planner you can use, or you can ask friend for referrals.

3. Understand the Different Type of Investment Accounts

It is also important to understand the basic investing tools and accounts. These accounts can be used to help you save for retirement as well. You should understand the difference between mutual funds and money market accounts. You should also spread your wealth among several different accounts, even if you want to focus primarily on mutual funds.

4. Real Estate Investments

You may be considering using real estate as an investment or a wealth building tool. Real estate is a great investment. However, there is a difference between flipping properties and investing in real estate for the long term. You should carefully consider the differences before you decide which one is best for you. Real estate that generates passive income is a great investment, but you need to make sure that it can cover the costs of upkeep and other potential problems as well.