How Much to Invest
The 50-30-20 Rule
A simple budgeting framework:
- 50% — Needs (rent, groceries, EMIs)
- 30% — Wants (dining, entertainment, shopping)
- 20% — Savings & Investments
Before You Invest: Emergency Fund First
Keep 6 months of expenses in a liquid fund or savings account before starting equity SIPs. This ensures you won't have to sell your equity investments during a crisis.
Example: Monthly expenses ₹30,000 → Emergency fund = ₹1,80,000
Age-Based Equity Allocation
A rough rule of thumb: Equity % = 100 - Your Age
| Age | Equity | Debt |
|---|---|---|
| 25 | 75% | 25% |
| 35 | 65% | 35% |
| 45 | 55% | 45% |
| 55 | 45% | 55% |
Start Small, Increase Annually
Don't wait to save ₹10,000/month. Start with what you can:
- ₹500/month is ₹6,000/year — better than zero
- Increase SIP by 10% every year (step-up SIP)
- A ₹5,000 SIP with 10% annual step-up for 20 years at 12% return = ₹76 lakh
Common Mistake
Waiting for the "perfect time" or "enough money" to start. Time in the market beats timing the market.