How Much to Invest

Short Answer: As much as possible

Long Answer: The key to building wealth for most people is investing money saved from working and investing that saved money wisely. So if we know that saving money is key then to build even more wealth for our retirement and future generations is to save more money than others and as much as possible. Every penny that you don't spend should be put into an account and earn interest. Not only should you just save what is leftover after spending but you should rethink how you spend money and spend less today so you can spend more in the future after earning interest from the saved money. The saved money shouldn't be under your bed or in a bank, it should be in a trading account. One that you can really put your money to work. Saving money in the bank is not a bad place to put your money if you need it in under a year. The bank is safe and you will have easy access to that capital. But the bank will not grow your money more than inflation and might even take away buying power with inflation.

Putting your long-term money in stocks and bonds you can beat inflation and earn money for future use. It is risky to put your money in stocks and bonds. The money might not be there exactly when you need it or it might be completely gone from a bad investment. That is why you have to really study your investments and chose wisely. Several bad stock choices can ruin your retirement fund and no longer would you be on track to have the quality of life in retirement. For more information on investing wisely click here.

Knowing how to invest is important but another key to building wealth is putting lots of money into your investments. Let's say you put in $10,000 each year into your portfolio and you could have well over a million dollars in 35 years when you are ready to retire. At 6% interest rate and compounded annually your account will hold $1,258,070 after only putting in $350,000. Money and investments do  better in the long run because they have more time to reap the rewards of compound interest. If you only save for the last ten years before retirement your investments would not gain as much or you would need spectacular returns that are few and far between to reach retirement goals. Starting early is key, if you start with your first job saving as much as possible you build a strong base and start a lifelong investing habit. Even you can just save $1,000 a year for the first few years it is still better than saving nothing and making it up later.

Remember wise and smart investors know the investments that are worth putting money in and save as much as possible early and often to take the most advantage of compound interest. A very powerful force and almost magical in how it grows money. Slow at first but grows like a snowball down the hillside. Anything saved is better than nothing saved.