Many people who are new to investing think that they have to invest all their savings. However, this is not true. In order to figure out how much money should you invest, you first have to determine whether you can afford to invest and what your financial goals are.
In order to figure how much money you can afford to invest is to look at your savings. This money is something you should be comfortable to lose as it will be locked away. This money for investing should not be the money you live off. That is why you should carefully think and plan before using your savings.
It is also important that you set aside money for 6 months for all your expenses. This is money that should not be invested under any circumstances. This is your emergency fund and if you lose your job or there is a medical emergency, there will be funds available to help you tide over.
Now you have clear picture in front of you — you are aware of how much money you have for an emergency and how much money you can use for investment. Unless you are getting money from another source, the money for investment will probably all that you can currently invest.
The next thing to do is to figure out how you will add to your investments in the future. If you are working, you can use a part of your salary to build up your investment portfolio. Here you need to consult a qualified financial planner who will help you set up a budget and offer you a clear picture of how much you will be able to invest in the future.
Your financial planner will ensure that you are not investing more than you can afford. He will also tell you when you are investing less than you should in order to reach your investment and financial goals.
Once thing is for sure, you should never borrow money for investing and you should never use the money that you have set aside for another purpose to invest. This can only spell disaster.