How Much Should I Invest Per Month?

Start with a specific goal, not a percentage

Before picking a monthly amount, you need a target. "Retire comfortably" isn't a target — "$1.5 million by age 62" is. Once you have a number and a deadline, the math tells you exactly what monthly contribution you need.

Example: if you want $1 million by 65 and you're 30 today, you have 35 years. At an 8% average annual return (the long-run S&P 500 average), you need about $670/month. That's your actual number — not whatever 15% of your salary happens to be.

What different monthly amounts actually grow to

At an 8% average annual return, here's what consistent monthly investing produces:

Assumes 8% average annual return, compounded monthly. For educational purposes only.

When you start matters more than how much you invest

This is the most overlooked fact in personal finance: the timing of your contributions matters more than the size of them.

Two people both invest $500/month at 8% — but one starts at 25, the other at 35:

• Starting at age 25: $500/month for 40 years → $1,740,000 by age 65
• Starting at age 35: $500/month for 30 years → $745,000 by age 65

That 10-year head start is worth nearly $1 million — without investing a single extra dollar per month. That's compound interest at scale.

The implication: it is almost always better to start investing a small amount now than to wait until you can invest a larger amount later. $100/month at 25 beats $500/month at 40 in most scenarios.

The 15% rule — and when it actually works

The 15% guideline works well if you:

• Start saving in your mid-20s
• Plan to retire around 65–67
• Want to replace roughly 75–80% of your pre-retirement income
• Will receive some Social Security benefits

If you started later, want to retire earlier, or live in a high cost-of-living area, 15% probably isn't enough. A 35-year-old targeting retirement at 55 might need to save 25–35% to make the numbers work.

Where to put your money — in order

1. 401(k) up to the employer match. If your employer matches 50% up to 6% of salary, that's a guaranteed 50% return on day one — nothing beats it.
2. Pay off high-interest debt (anything above 7–8% APR). The guaranteed "return" of eliminating 24% credit card debt beats the market every time.
3. Roth IRA up to the annual limit ($7,000 in 2024). Tax-free growth for decades is one of the best deals available to individual investors.
4. Max out your 401(k) ($23,000 in 2024).
5. Taxable brokerage account — anything beyond the above.

The easiest way to increase your savings rate

Whenever you get a raise, automatically direct 50% of it toward investing. If you get a $300/month raise, set up an automatic transfer of $150/month to your investment account the same week. You never see the money, you don't miss it, and within a decade your monthly contribution has doubled — painlessly.

Another proven tactic: increase your contribution rate by just 1% of income each year. Going from 10% to 11% is invisible in your paycheck, but over 10 years it compounds dramatically.

What to actually buy

Once you know how much to invest, the "what" is simple for most people: an S&P 500 index fund. Specifically VOO (Vanguard), FXAIX (Fidelity), or SPY. These track the 500 largest US companies, charge near-zero fees (VOO charges 0.03%/year), and have outperformed the vast majority of actively managed funds over every 15+ year period on record.

The strategy: pick the index fund, automate monthly purchases, don't check it obsessively, repeat for decades. That's it.

Frequently asked questions