How to Save Money for Investment

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All investments are based on one single assumption, i.e. you have extra cash to invest. Yet so many people out there are facing difficulties saving sufficient money for investment. How exactly to save money for investment?

1. Classify your monthly income
Dedicate a set proportion of your monthly income into LIS categories, namely Living, Investment, Saving. An example of an LIS proportion is 80% – 10% -10%. This means you would live with 80% of your income every month (for meals, utilities, loans, etc) and save the other 20%, 10% in Investment (strictly for investment only) and 10% in your savings (normal savings, you can also use it for weekend getaways, holiday trips, buy a new TV set, etc).

2. Spend only the necessary
Set up budget how to spend your 80%. Find out areas of expenditure you can be thrifty on, which are usually going out, food and other non-essentials though ‘fun’ things. If you have any leftover money from your L category you can always channel more funds into your I and S. Never live beyond your means.

3. Save in bank accounts
Save your 20% plus whatever leftover from L in bank. Explore different types of saving accounts and pick one which offers higher interest rate. This not only secures your fund, it also prevents you from accessing your funds readily.

4. Make it less accessible
An additional step to secure your Investment fund is by making it less accessible, e.g. without using an ATM card. You should never touch your I fund, never ever, unless when you are using it for investments (e.g. stocks, house, etc).

5. Get started now!
Regardless of how much is your monthly income and how much you have in your savings currently, start saving now! You can begin with 1 dollar in your account. As long as you keep doing it, you will soon have sufficient money for investment, as well as some savings for other purposes.
To your investment success!

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