How much of the income should I allocate for investments?

It depends. It is necessary to understand your reality today to know how much you can invest.



If you clicked on this link expecting a ready answer about how much of your income you should allocate for investments , the truth is that there is no single alternative. After all, it is always important to consider each person’s context and situation when talking about personal finance.

What may seem like little to one person, for example, may be an impossible goal for another. Therefore, you need to consider some factors before defining how much you are going to set aside to invest.

But beware: if you are not investing yet, the first step is to create an emergency reserve – money that will be saved and can be used if something unforeseen arises.

Below, check how much to invest according to different realities.

How much to invest if you currently keep zero money

Saving money is not easy. For millions of Brazilians, this involves very complex issues that the numbers below help to understand:

  • Half of the Brazilian population lived on just R$413 a month in 2018, according to the Continuous National Household Sample Survey (Pnad Contínua), carried out by the Brazilian Institute of Geography and Statistics (IBGE);
  • 36% of Brazilians say they do not manage their own finances, according to a survey of SPC (Credit Protection Service) in January 2019. For more than a third of the population, therefore, to understand what goes in and out of pocket every month it’s not a habit;
  • 43% of people end the month zeroed, according to the SPC – and another 33% end the month in red;
  • In addition, one in three credit card users is not sure how much they spend on their bill .

So if you can’t save money, that’s fine. Ending the month in the blue is still a privilege for a small portion of the population, unfortunately – let alone invest.

But if you’ve put your bills down on paper and understood that it is possible, yes, to save some amount every month, start with a small goal.

It could be 1% or 2% of your income, for example. The main thing at this point is to show yourself that it is possible to save. If the goal is too high, you may not be able to save and become frustrated.

Better to start small and save more over time than starting with aggressive goals, not reaching them and eventually giving up.

How much to invest if you are already saving but without a specific goal?

If you already have the habit of saving money, but end up doing it in a disorderly way, the next step is to organize your finances to create the habit of investing, every month, the same percentage of your income.

One option is to adopt the 50-15-35 rule, where 50% of income goes towards essential expenses, 35% towards leisure and lifestyle expenses, and 15% towards financial priorities – such as paying off debt, saving or investing.

If you do the math and understand that 15% is practically impossible, find a percentage that fits your budget. The important thing is to make a habit of investing at least the same amount every month .

How much to invest if you are a card-carrying saver?

Now, if you’re a card-carrying saver and can save a fixed portion of your income every month, your goal might be bolder.

If you already keep 10%, try to start saving 15%. If you can meet this goal for a few months, start saving 20%.

One possibility is to adopt the 50-30-20 rule, in which 50% of income goes to essential expenses, 30% to variable expenses – superfluous and lifestyle – and 20% to save and invest.

If you feel you can go even further, invest 30% of your income – the golden goal recommended by many personal finance experts.

It is clear that reaching this percentage is very unrealistic for a large part of the Brazilian population. But, as you gradually increase how much you can invest, you can get as close to it as possible within what is possible for you.

But, remember: it takes balance

Saving money and investing is very important, but so is enjoying the present moment. So it may not be the best strategy to eliminate all spending on leisure and lifestyle just to save more.

It’s important to strike a balance between enjoying today while preparing for tomorrow – and that equation only you can solve.


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