Budget to invest
By organising your finances, you may be surprised at how much you have available to invest.
Many people
have found that an effective way to build up an investment portfolio
is by making regular investments each month. But how much should
you invest?
The key is to
work out how much you can afford to invest without having to compromise
your lifestyle too much. There is no point depriving yourself of
the things you enjoy in order to fund an over-ambitious investment
plan - the first unexpected expense is likely to throw out your
whole plan.
So how can you work out the happy medium that will let you put away a regular amount that you can afford to live without? The answer is to do a budget.
A personal budget
Doing a personal
budget may not sound very inviting, but most people who have done
one have found it to be a very worthwhile experience. It's not very
difficult to do - just try our Budget
Worksheet.
How much can I invest?
After completing the budget worksheet, you should know how much of your income is left over from your regular spending - this is the total amount that you could invest.
It is a good idea not to commit to investing all of this amount. You need to allow for a margin in case you have underestimated a few of your expenses, or in case of an emergency or unforseen event. So take out an allowance for these things, and the remainder is what you can comfortably invest without putting yourself through too much pain. If you come to the end of the year and have a little extra left over, you can always add it to your investments then.
Investing automatically
And one more tip - it's a great idea to have your regular investment deducted from your bank account each month automatically. That way you won't really miss the money, and you won't be tempted to spend it before it finds its way to your investment.
To find out more about making regular investments, visit The right time to invest?
To find out how much your investments could be worth in the future, try our Investment Calculator.