A financial planner has advice for anyone hung up on deciding how much to invest: Just start

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A financial planner has advice for anyone hung up on deciding how much to invest: Just start

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how much should I invest

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Don't get caught up contemplating, "how much should I invest?" Just invest something.

  • Too many people don't start investing because they're hung up contemplating "how much should I invest?"
  • It's a fair question, but the reality is that it doesn't matter how much, says financial planner Erika Safran, "just start." Any amount of money invested wisely is better than none at all.
  • However, you should only start investing once you have an emergency fund in place and no high-interest debt.
  • To find out exactly how much you can afford to invest, examine your cash flow. Aim to eventually put 10% to 15% of your gross income toward savings and investments, whether into a retirement account, taxable brokerage account, or both.
  • Looking for help figuring out how to invest? SmartAsset's free tool can help you find a licensed professional to help with your financial goals »

The first step to accomplishing almost any task is simply putting one foot in front of the other. You don't always need to know how the path or process will unfold in order to get going. Investing is no different.

"It's all about beginning with whatever you begin with - just start," Erika Safran, certified financial planner and principal at Safran Wealth Advisors, told Business Insider. "Analyzing your options is not the entire step. You have to move beyond that. Take the risk of taking action."

If you're afraid that the amount of money you're comfortable investing is too little, don't be. Whether it's $100 a month or $1,000, the beauty of investing is that it favors those who simply start. Compound growth will take the lead.

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As Safran says, "Whatever amount you pick, you can change it. It's not finite. No one gets this right at the beginning."

While investing is a "duty," something that's required of anyone who wants to build wealth, she said, it should only happen after you've established an emergency fund and paid off high-interest debt.

"You can't invest a nickel until you have an emergency fund," Safran said. "You can't talk about your future until you take care of your current, and your current means setting up your emergency fund." Once you've set up a savings account with enough money to cover three to six months of expenses in the event of job loss or another unexpected expenditure and paid off any lingering consumer debt, she said, you're ready to start investing.

How much should I invest?

Safran said the only way to figure out how much you can afford to invest is by looking at your cash flow. Figure out how much you pay for rent and any other expenses, plus how much you spend to maintain your lifestyle. If your lifestyle is too expensive to pay for with cash and you rely on credit to cover your costs, investing shouldn't be the priority, Safran said.

It also depends on your goals. If you want to grow your money to buy a house in five to 10 years, you may need to contribute more to investments than if you're only focusing on building up a retirement nest egg. "Saving and investing are often thrown together," Safran said, "but they really are two different concepts - 'I'm going to save money for a future objective and my risk tolerance will determine how I invest that.'"

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Provided you already have an emergency fund set up, the money that's left over after expenses (and "expenses" can include your short-term savings goals) every month is what you should invest, she said, "and if you don't like what's left over, see what you can change."

Need help with your money? SmartAsset's free tool can help you find a licensed professional near you »

She continued: "All you need is a rough-numbers calculation. You don't have to be so exact. Just be in the right ballpark because you can adjust it."

That said, Safran provided a good benchmark to aim for: Eventually, 10% to 15% of your gross income should go toward savings and investments. That means someone earning a pretax salary of $60,000 should work their way up to contributing $9,000 a year to tax-advantaged retirement accounts or other investment accounts. It may sound like a lot, but that's less than $800 a month before taxes, or just $375 per paycheck.

As Safran said, if there's no room in your budget, something has to change. Investing won't be a priority unless you intentionally make it, and that may begin with cutting your spending to free up some money.

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