How much should I invest earning £70,000 per year?

How much should I invest earning £70,000 per year?

Earning £70,000 a year but don't know where to start with investing? You're in the right place! 

This three-step guide is designed for those earning £70,000 per year. (If you earn more/less than £70,000, check out our other investing guides at the bottom of this page.)

Of course, each person’s financial situation is different, so be sure to crunch your own numbers before investing!

Step 1: figure out how often you should invest

Contrary to popular belief, you don’t need a lump sum to get started with investing. If you want to invest a portion of your salary regularly, you may want to consider dollar-cost averaging. It's an effective way of investing when receiving your salary on a monthly basis.

It involves investing equal amounts of money into the market at regular intervals (daily, weekly, monthly) regardless of whether the market is rising or falling. It adopts a long term approach, where an investor won't change how much they're investing, despite market conditions.

✏️ Scoop tip - if you have a monthly budget set up, then dollar-cost averaging each month may be more straightforward for you. Need a monthly budget planner? Simply sign up to our newsletter, The Weekly Scoop, a pre-made version will be waiting for you on the confirmation page.
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Step 2: figure out how much

By the time national insurance, tax, a possible student loan and pension deductions of 5% have been made to your salary, your yearly take-home pay will be around the £43,700 .mark, or £3,640 per month.

Now, applying the 50/30/20 budgeting rule of 50% spent on needs, 30% on wants, and 20% on savings, we can assume you may want to save/invest 20% of £3,640. This would be £728 per month.

First, it's important to have 3–6 months worth of savings. This is to help prepare for any potential emergencies. Simply work out your monthly outgoings and multiply this by 3 (or however many months worth of savings you'd like to have).

Once your savings are set up (taking advantage of any tax relief ISAs), you could look towards investing.

Step 3: make the investment

So, now you know how much to invest each month and you have your savings set up. Great!

Now, it's time to decide what to invest in.

Diversifying is recommended for a beginner, as it helps reduce risk. You can diversify by picking stocks in different sectors and countries (the Shares app has a fancy stock screener to help with this). Or, you can choose to diversify by investing in a range of different asset classes (read more on this in our guide on understanding asset classes).

So, this part is really down to you. 

Firstly, can you realistically afford to invest £728 each month? If so, picking which assets match your financial goals is key. 

If £728 is unrealistic, then make sure to re-budget an amount that is achievable. There’s no point over investing if you can’t afford basic needs! 

If investing in stocks is something you want to explore, check out our article on how to invest in stocks and the different types of stocks available

Or, if you're keen to explore other assets, visit our guides on:

Guides on other salaries

Earning more/less than £70,000 and want a similar breakdown? Remember to check out our other pieces on:

Got more questions on investing? Join our community inside the Shares app and ask away!

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As with all investing, your capital is at risk. 

Shares does not provide investment advice. If you are unsure about anything, please seek advice from an authorised financial advisor. This content is for educational purposes only. Shares App Ltd is an appointed representative of RiskSave Technologies Ltd, which is authorised and regulated by the Financial Conduct Authority (FRN 775330). Shares App Ltd is a company registered in England and Wales with company number 13374448.

Meet the authors

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James Ashoo

Senior Content Writer

James has been investing for over five years. His aim is to explain the hard stuff, easily! When he's not chewing your ear off about stocks and crypto, he'll most likely be telling bad jokes.

Harjas Singh

Harjas Singh

Chief Product Officer & Co-Founder

With a wealth of experience in fintech, Harjas is the man in the know when it comes to all things product. Investing features, chatting capabilities and thriving communities – he oversees all development on the Shares app!

Harry Harrison

Harry Harrison

Finance Writer

Harry is an experienced business writer, with a love for all things tech. In his free time, he enjoys reading, playing sport and winning at chess. He also loves posting inside the Shares app!