Unlocking the Secrets of Legal Jargon with AI Legalese Decoder: A Guide to Investing €2.5k Monthly for Beginners
- May 20, 2024
- Posted by: legaleseblogger
- Category: Related News
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## Seeking Financial Advice for Investing and Saving for an Apartment
Hello everyone,
I am a 24-year-old who has been working full-time for 10 months now. I have diligently saved up enough money for an emergency fund, and I am now looking to start investing while also continuing to save for an apartment purchase. I would appreciate some advice on how much I should be investing and where I should be putting my money. My long-term goal is to grow my wealth, so I am not interested in short-term gains. However, I also have the aim of buying an apartment in approximately 1.5 to 2 years.
### Current Financial Situation
– I have saved €22k over the past year, which is currently sitting in a high-yield interest account earning 4% interest, compounded daily. This money serves as my emergency fund, covering around 15 months’ worth of expenses. While I consider this fund essential for unforeseen circumstances, I am open to using a portion of it to kickstart my investments.
– My target is to save approximately €30k within the next 1.5 to 2 years for a down payment and initial costs associated with purchasing a property. This property will be for my personal use initially, but I am open to the idea of renting it out in the future to potentially fund the purchase of another property with a partner.
– After accounting for fixed expenses and personal spending, I am left with €2.5k per month from my salary. If I were to save all of this amount, I would reach my down payment goal within a year. Therefore, I am considering splitting this monthly allowance into savings and investments, possibly in a 60/40 ratio. As for the type of investments to consider, I am open to suggestions.
– I do not have any existing debt.
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****** just grabbed a
So a few things here:
If you are single (no dependants) and renting, why do you need 15 months of emergency fund? You should reduce that to 3 months imho, 6 months if you want to stay on the safe side. Remember, this is only for real emergencies, and you shouldn’t really have any and your exposure to one should be low (don’t know your health situation, so that might change it). You also have quite a large amount of disposable income, so in case something happens, you can just wait for your pay check.
Then, to me, you should just calculate how much you should save to get to 30k€ in 1.5/2 years:
1.5: 1666.67€
2: 1250€
Which would take your savings rate at a minimum of 50%, which is fine if you want to buy property.
As an aside, the best advice I can give you is to not postpone this. If you know you want to buy a house in the future, put aside some money for it. If you just invest all your money right now, you’ll just have to wait longer to get the liquidity to buy your house, or, worst of all, you would have to sell your investments.
I would also urge you to include in this savings anything you forsee to be doing in within the next 5 years. For example, replacing your car. Basically anything that you would need to save money for, should be considered in this.
I would keep the money into a savings account at 4%, and if you want to spend the time and find a way to buy bonds without super high fees or something, then do that once you have a larger lump sum.
If you decrease your emergency fund, don’t use the remaining money for this, you have better things to do with that right now.
The last thing to do is investing. Without going too much into it, ETFs are the best investment you can access easily. Do some research on what ETFs are first, choose how much exposure you want to the USA/other countries, and then decide which one to buy. If you want an easy strategy/portfolio, just stick to one ETF with a larger cover of the market. If you want a more nuanced portfolio, then do your research or ask the help of a financial adviser (but don’t let them suck you into buying anything. Don’t let them manage your money, don’t let them sell you their products. Find an indipendent financial adviser if you can).
As I saw a comment below as well, you are free to allocate a low percentage of your investment to speculation, for example, cryptocurrencies. This should really be a very low percentage, money you are 100% willing to lose, but that can boost your returns greatly.
If you decrease your emergency fund, invest whatever cash you have leftover as a lump sum. If you don’t feel emotionally ready to do it, you can then cost average it in, but lump sum us the better option. You want money in the market for as long as possible.
You can also consider what’s most important for you. All this can change if you decide that your retirement is above all. All the percentages and split will be different, depending on your goals, but I would advise to follow these guidelines.
E. T. F.
If you can save for a down payment in a year or two then I would go all in on new home. Once you figure out shelter you can go recommend 15-20% “vwce and chill” and hit the loan with the rest of the salary.
If you have realy strong itch for investing you can start with like 100-200€ monthly, again vwce and chill and automate it. Since you are using TR it would be few clicks for you to setup automated buy. Do not buy manualy and do not pick stocks. That will drain your willpower. Rather focus on your job.
Try also r/HenryFinanceEurope. That’s for high earning individuals
Can you please share what bank/broker (and in what country) or anything else you use thet give you 4% in savings?
Have you got a pension sorted yet/first?
Does your jurisdiction offer a tax-wrapper similar to UK ISA/US ROTH IRA so that the gains inside the fund are not taxable on the way out?
2400€ VWCE, 100€ Bitcoin
Invest in me
[deleted]
XDEQ, everything