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Ventura Wealth Clients
2 min Read

Ah, the million-dollar question (well, hopefully, it becomes a million-dollar question someday through smart investing). Figuring out how much of your hard-earned salary to allocate towards investing can feel daunting. The truth is, there's no one-size-fits-all answer. It depends on your unique financial situation and goals. But fear not, this blog will guide you through the factors to consider to determine how much of your salary you should invest.

A common rule of thumb is the 50/30/20 rule. This approach suggests dividing your after-tax income into three buckets:

  • 50% for Needs: This covers your essential expenses like rent/mortgage, utilities, groceries, transportation, and minimum debt payments.
  • 30% for Wants: Here's your fun money! Allocate this towards entertainment, dining out, hobbies, or subscriptions.
  • 20% for Savings and Investments: This chunk is crucial for building your financial future. It can be further divided between your emergency fund, retirement savings, and other investment goals.

While the 20% mark is a good starting point for savings and investments, it may not be ideal for everyone. Let's delve deeper into the factors that can influence your investment percentage:

Age and risk tolerance

  • Younger Investors: Generally have a longer investment horizon and can take on more risk. They may allocate a higher percentage (even more than 20%) towards growth-oriented options like stock investment.
  • Middle-Aged Investors: As responsibilities like family and mortgage payments increase, risk tolerance may decrease. They might aim for a balance between growth and stability, potentially keeping their investment percentage around 20%. Mutual fund investments are a popular instrument for them.
  • Nearing Retirement: Focus on capital preservation and prioritise income-generating investments. Their investment percentage might shift towards safer options like bonds, with a lower overall percentage compared to younger investors.

Your financial goals

  • Short-Term Goals: Saving for a down payment on a house or a dream vacation might require a higher savings rate, temporarily impacting your investment percentage.
  • Long-Term Goals: Early retirement or a luxurious retirement lifestyle might necessitate a higher investment percentage throughout your working years.

Income and expenses

  • Higher Income: If your basic needs and wants are comfortably covered, you can allocate a larger portion of your salary towards investments.
  • Lower Income: You might need to prioritise necessities and build a solid emergency fund before aggressively investing.


  • Start Early: Even a small percentage consistently invested over a long period can benefit from compounding interest.
  • Automate Your Savings: Set up automatic transfers to your investment accounts to ensure consistent saving and investing.
  • Review and Adjust: Your financial situation and goals will evolve over time. Regularly reassess your investment percentage to ensure it aligns with your changing needs.


The key to unlocking your investment sweet spot is to find a balance between your current needs, future goals, and risk tolerance. There's no pressure to hit the 20% mark immediately. Start with a comfortable percentage, prioritise building a solid financial foundation, and gradually increase your investment allocation as your situation allows. Remember, consistency is key! By dedicating a portion of your salary towards investing and making smart financial decisions, you can pave the way for a secure and prosperous future.