How much money do you need to invest each month?

There are no rules regarding how much money you have to invest each month. In fact, you could invest $20 today, and not invest again for 6 months or 5 years. However, we recommend treating investing like a habit so that you can put it on autopilot and see your money grow consistently over time. 

We both treat investing as if it’s a monthly bill. Every month we send the same amount of money over to our investing accounts so we know we’re going to hit our retirement goals on time (we both plan to retire early). 

Another benefit of investing regularly is that you’ll be doing something called Dollar Cost Averaging (DCA for short). The stock market tends to ebb and flow in price. Since you’re investing the same amount of money consistently, you will be buying at all times, regardless of the price. This means the price you’re buying at will average out over time, so if you bought some on a day when it was a great price, and you bought some on a day when the price was really high, it’ll all average out and won’t really matter. 

Some people try to time the market, and they’ll hold off and buy only when the market prices are low (think of it like buying something when it’s on sale), however no one has a crystal ball to predict when this happens and they’ll usually get it wrong. Investing consistently over time (the DCA method) tends to outperform those who try to time the market in the long-run, and it’s much lower stress. A true win-win.