How much should I be spending/saving/investing each month ideally. How does the ratio come about? Am I doing it right & safe? Also, should I sell my investments upon x% yield or wait it out?

Hi there,

It largely depends. The ratio on saving and investing differs from everyone because everyone has a different life stage and priority. The amount to save and investing will be lower for a couple with children compared to a single person. But typically, a good gauge will be 40% on expenses (including insurance which makes up proxy 10%), 30% on liquid investments (depending on risk profile) and 30% on liquid savings. If you are looking at a lower risk tolerance where, you diversified portfolio where a larger amount of your portfolio is in fixed income instruments.

I normally try to keep expenses between 30-40% if I can because frugality in the early years helps in the Long run.

Investments are also coupled with time horizon instead of target price. It helps also to understand investments with the "doubling mindset." How Long will it take to double what I have with x% in mind? The reason is because it helps to stick through the volatility with the end in mind Because the volatility can be unnerving and most retail investors make investment mistakes that are usually emotional in nature. The lower x% is, the longer of course it will take.

Of course, with that in mind, this may mean if a stock isn't doing well over a long ter, you may want to liquidate it and capitalise on other opportunities. So it's rather organic while requiring a certain end in mind to decide on a course to take.

Also once you're married with children, you'll need a high cash outlay at some point for big ticketed items, children planning etc. Your tolerance for risk may be adjusted because of that. So thats something to consider as well.

Financial planning is an integral part of life. You can reach me here to find out more.