This is the ideal amount of money you should invest, according to Sallie Krawcheck. investinyou (In partnership with acorns.)
"There's a conception out there:The ultimate goal, she says, "is to be saving and investing 20% of your take home pay." But you don't have to start with that much right away: "I know it's a lot, so start with 1%, start with 2%." Then, aim to gradually increase that amount over time.
Failing to invest is like letting money fall out of your wallet every day, she explains. When you keep money in a regular savings account, your annualized return is tiny — most people. But if you put your money to work in a diversified portfolio, the returns have historically been about 6%. And, if you invest in equities, or stocks, "it's been about a 9.5% annualized returns," Krawcheck says. Stocks come with more risk than bonds and cash but have the potential for higher returns. Whether you choose to invest in a diversified portfolio or stocks, the returns they can offer "is a lot more than the close-to-nothing that you get from saving — and the nothing that you get from spending," she says.
The easiest way to work your way up to investing 20% of your income is to have a percentage of your paycheck go straight into your employer-sponsored 401, "particularly if there's a company match," Krawcheck says. With a match your employer will make a contribution to your 401 that is the same as your contribution, up to a certain amount. For example, if you choose to put 4% of your salary directly into your account, your employer will put that same amount in as well, in effect doubling your contribution.
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