What does invest every month mean?

This question and answer originally appeared at Quora.

Invest every month has two main benefits:

  1. It uses the PAY YOURSELF FIRST principle. If you commit to putting money aside every month before you get a chance to see it (and spend it) you are less likely to miss this money and will get used to saving it each month.
  2. DOLLAR COST AVERAGING – Rather than trying to time the market, you continuously put aside the same amount of money each month. Joe Homan has already provided a good answer for this and you could also take a look at this explanation on Investopedia.

How much you set aside to invest each month is dependant on your cash flow and personal goals, however as a general rule I would say that you should put aside 10% as a minimum for future financial survival, 30% if you want to be financially comfortable and 50% if you want to have financial freedom at a younger age.

This answer first appeared here.

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Mark Underdown

Financial Planner, Small Acorn Money

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