Question 1

How much should I invest each month?

Accepted Answer

A common guideline is to invest 15-20% of your gross income. However, the right amount depends on your financial goals, timeline, and current obligations. Use this calculator to find your specific number.

Question 2

What return rate should I assume?

Accepted Answer

For long-term stock market investing, 7-10% nominal return is historically reasonable. For a more conservative estimate, use 6-7% which accounts for a diversified portfolio. Always use a lower rate for shorter time horizons.

Question 3

Should I invest a lump sum or monthly?

Accepted Answer

Historically, lump sum investing outperforms dollar-cost averaging about 67% of the time. However, regular monthly investing is more practical for most people and reduces the risk of investing at a market peak.

Question 4

Does inflation affect my investment goal?

Accepted Answer

Yes. If your goal is 20 years away, you need to account for inflation. A million dollars today will only buy about $550,000 worth of goods in 20 years at 3% inflation. Use inflation-adjusted returns for accuracy.