Your paycheck is hard-earned, so it’s important to know how much of it to invest and where. But if you have lots of bills or make a low wage, you may not think you can afford to invest at all.
But investing today is crucial for your future. You want to do it as soon as possible, because the longer you invest, the more you’ll earn.
The good news is that you don’t need to be a millionaire to start investing. And this seemingly complicated concept of how much to invest may not be so complicated after all, even for rookie investors!
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How Much of Your Income Should You Invest?
Like many things in life, there is no one-size-fits-all solution, as everyone has different situations. However, the general recommendation is that you should invest around 15% of your total income.
The reason 15% is considered a baseline is because it strikes the perfect balance of future growth while still allowing you to maintain a comfortable lifestyle.
Targeting 15% will ensure you have enough saved for your golden years, but you likely won’t find yourself pinching pennies to make ends meet.
Can you afford to invest 15%?
It’s important to first create a budget and assess your income and expenses. Doing this will determine if 15% of your income is a realistic amount for you to invest.
If you have a lot of high-interest debt, you may want to prioritize paying off debt first before investing. If you put too much of your income into investing, it may take longer for you to pay off your debt. In that case, you may find it better to start with a lower percentage such as 5% or 10% — or even 1%.
It is also essential that you establish an emergency fund for those “rainy day” expenses. Doing this prevents you from taking on debt in the event of an unexpected expense.
There are other strategies you can follow depending on your situation, but I recommend these two steps first, to get a clear overview of how much you can dedicate to investing.
READ MORE: How To Start Investing
How Much You Should Invest Based on Your Income Level
If you stick with investing the recommended 15%, in theory, you’d be allocating the same percentage of your income no matter your circumstances.
But the dent it puts in your budget may not be the same for everyone when factoring in different life circumstances and tax brackets.
Necessities like housing may occupy a greater portion of your earnings if you are a lower earner. So, you may have less room for savings and investments since necessities absorb more of your budget.
On the flip side, higher earners may be in a higher tax bracket and pay more in taxes, equaling a lower take-home pay (percentage-wise.)
So, keep factors like this in mind when you decide how much you should invest.
Here’s what investing certain percentages of your income could look like each month, per income level.
Annual income | 10% per month | 15% per month | 25% per month |
---|---|---|---|
$15,000 | $125 | $187 | $312 |
$30,000 | $250 | $375 | $625 |
$50,000 | $417 | $625 | $1,042 |
$75,000 | $625 | $937 | $1,562 |
$100,000 | $833 | $1,250 | $2,083 |
$125,000 | $1,042 | $1,562 | $2,604 |
How much should I invest if I make minimum wage?
You may find it tricky to make ends meet when you make minimum wage — let alone save and invest. But just because you make minimum wage doesn’t mean investing is impossible.
Shoot for the 15% recommendation, but it’s completely okay if you have to start smaller. Investing something is better than nothing — we all start somewhere!
If you’re young and have a long timeline, you can afford to be aggressive with your investments now — this means putting the small amount you are investing into higher-risk/higher-return assets. (Assuming you already have some emergency funds in a safe space like a high-yield savings account!)
You can always catch up and increase your investment percentages in the future, especially as you invest in yourself and find ways to earn more money.
READ MORE: How To Start a Side Hustle
How much should I invest if I have student debt?
Many people find themselves with student debt — it’s a trillion-dollar industry, after all. In 2023 there was a total of $1.727 trillion in student loan debt!
If you have low-interest federal student loans, specifically with rates lower than 7%, it could be smart to invest even while paying off your loans. That’s because most investments see a return of 7% or greater annually.
You are losing out on those returns, which are more than what you pay in interest, when you don’t invest.
If you choose to invest while paying off your student loans, set a percentage to put towards paying off the debt and a percentage towards investing.
For example, if you follow the 50/30/20 budgeting rule (50% for needs, 30% for wants, and 20% for savings), you could split the 20% towards savings and debt. You may want to put 5% to investing and 15% to debt — or the other way around.
You may also decide to reduce the numbers in other categories, such as the 30% proposed to spend on wants. To me, eliminating student debt could be considered a “want,” right? This is all up to you and just depends on your goals, of course!
How much should I invest if I have a company match?
If your employer offers you a 401(k) match, you definitely want to take full advantage of this free money. A company match is when your employer contributes money to your 401(k) account for you.
Employers typically match a percentage of your contributions up to another percentage of your salary. So, to maximize your earnings potential, you’ll want to contribute the highest percentage that gets you the most match.
Let's say you earn a $60,000 annual salary and your employer matches 50% of your contributions up to 5%.
That means your employer would give you half of what you contribute until you contribute more than 5%. At that point, they will only match the total at 5%.
Employee contribution | Monthly contribution (monthly salary = $5,000) | Annual contribution (annual salary = $60,000) |
---|---|---|
2% (not meeting full match) | Your contribution: $100 Employer contribution: $50 | Your contribution: $1,200 Employer contribution: $600 |
5% (meeting full match) | Your contribution: $250 Employer contribution: $125 | Your contribution: $3,000 Employer contribution: $1,500 |
10% (contributing above match) | Your contribution: $500 Employer contribution: $125 | Your contribution: $6,000 Employer contribution: $1,500 |
So, in this example, you should invest at least $250 per month ($3,000 per year) to max out your employer’s match.
Keep in mind you aren’t limited to only contributing the full match. You can contribute as much as you feel comfortable with, up to the annual limit — which in 2024 is $23,000.
Calculate How Much You Can Afford to Invest
Everyone has a unique financial situation with unique factors to consider.
To figure out whether you should go for the standard 15% or something else, follow these general steps:
1. Outline your budget (a list of your income and expenses)
This is the most important first step when determining how much you can afford to invest.
Make a list of your monthly income and all of your expenses, including bills, groceries, insurance, debt payments, and so on.
2. Figure out your disposable income
Once you’ve calculated your income and expenses, you can figure out your disposable income (or extra money).
This is money you can put towards other things like wants, savings, and investing.
3. Evaluate your risk tolerance
Your risk tolerance is simply your ability to endure losses on your investments.
Typically, the more time you have to recover the losses (i.e., the younger you are), the greater your risk tolerance is and the more aggressive you can be.
4. Consider other budget factors
This includes your debt situation and whether you have an emergency fund of three to six months of living expenses.
If you have a lot of debt and don’t have an emergency fund, you may want to focus on putting more of your disposable income in those areas before investing.
5. Calculate your investment amount
Figure out the amount of your disposable income that you can invest and remain comfortable.
Remember that the recommended amount is 15% but it’s okay if you need to start smaller! Some investing apps let you start investing in fractional shares with only a few dollars. For example, Webull sets its minimum investment at just $5.
READ MORE: Webull Review: How It Compares for Beginner Investors
6. Periodically review and adjust
Things change — and so does the economy.
If your income goes up or you come into a lump sum of money (such as an inheritance or even just a birthday gift), you can add that money to your investments for a boost or to catch up on years where you invested less.
Or, if you’re laid off from your job and have been aggressively investing a high amount each month, you may want to temporarily scale back to avoid using up too much of your emergency fund.
If you need something more visual where you can play around with some numbers, here’s a free tool by Erika to help you plan and understand your investing goals.
FAQs
If a person’s risk tolerance is low, what investments should they consider?
If you have a low risk tolerance, more liquid investments like high-yield savings accounts, money market funds, certificates of deposits, or savings bonds are a good starting point.
You can also consider stocks that pay dividends, preferred stocks, and fixed annuities.
How can you maintain a balance between high-risk and low-risk
investments?
You can balance high-risk and low-risk investments by diversifying your portfolio. This means putting your money into a variety of investment types, rather than all into one type. Make sure it aligns with your long-term financial goals, your time horizon, and your overall risk.
For long time horizons (and more risk), consider growth stocks and index funds. For less risk, consider bonds or certificates of deposit. The key is to have a mix, so that the low risk balances out the high risk.
TL;DR: How Much Should I Invest?
If you are in a position to invest the recommended 15% or more of your income, go for it! But the truth is, for some people, it’s more realistic to invest smaller amounts like 5% to 10% of your income. Investing anything is better than nothing and we all start somewhere.
Remember to adequately budget, build an emergency fund, and then use these factors to help calculate how much you can invest. Depending on your financial goals and situation, investing may also need to take the back seat while you manage debt.
For more investing advice, check out these episodes of the Erika Taught Me podcast:
- Investing Advice from the Most Powerful Woman on Wall Street
- Do THIS to Become a Millionaire
- Investing in the Stock Market Explained: A Guide For Beginners

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Summer is a financial services professional and business school graduate turned personal finance writer. Through her careers in banking and corporate finance, she realized her true passion is to educate consumers about the complicated facets of all things money. Being immersed in the world of finance also inspired her to hit her own major financial milestones — and she's dedicated to sharing those tips with you! When Summer isn't writing, she is enjoying her time with her husband, daughter, and three cats.