Everybody has heard about the importance of saving and the importance of investing the money.But how much money should you save and how much money should you invest?
When you save money you have some money on the side in case of an emergency, and when you invest you are growing it for your future, so you need to determine how much money you are going to need to have on the side. So, the question is really how much money do you need to have on the side.It is generally accepted that you should have 6 months worth of expenses saved up.That is a great goal to work torwards.
Everything else is better put aside to your investments so you can grow your money and not have to work as hard to obtain the same lifestyle that you currently live at.
Your overall goal should be to save 6 months of reserves so you can easily pull it out and to invest whatever else you can save into something that will grow over the long term, if you can do that you will be sitting pretty financially. Of course this is a long term goal, so I’ll let you decide how you best want to approach achieving it. Whether you want to start contributing to your savings and your retirement investing at the same time or whether you want to start with your savings and then move onto your investing is up to you.
However it is just a good idea to have a little of each.
Ok, so what can you invest into? Well there are a few different places to invest your money and each one of these can be extremely powerful over the long term.
The very first place that you can invest into is the stock market.One of the stock market tips around is to start investing your money wisely into fundamentally strong stocks that pay dividends and then hold onto them for the long term.
You can also invest your money into real estate. This is the process of buying a house and renting it out to tenents. This way you get cash flow from the house and long term growth as the house continues to appreciate over time.
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