How much should I invest?

Are you ready to invest?

Before you get started, there are a few things you need to do to protect yourself and your finances. 

1. Pay off high-interest debt, like credit cards or payday loans
2. Build an emergency fund covering 3 to 6 months of living costs
3. Make sure any money you invest isn’t needed for short-term goals, like holidays or buying a house in the next few years

By doing these three things, you can reduce some of the risk that comes with investing.

How much of my money should I invest?

How much you should invest depends on your income and circumstances. A general rule of thumb is to aim to invest 10-20% of your take-home pay each month. But if you don’t have much money left after paying your rent, mortgage, bills and essential living costs, you might only be able to invest a small amount each month. Try to prioritise an emergency fund before investing. Then consider your short and long-term goals, such as buying a home or planning for retirement, and adjust what you want to invest accordingly.

If you’re financially stable and you have a good income, you may be able to invest more than 10-20% of your income each month.

Similarly, if you’re new to investing or you’re risk-averse, you could start small. You may decide to invest 5 to 10% of your income to begin with, perhaps investing in funds that track the FTSE 100 and other indexes. You could then gradually increase your contributions as you build more confidence and learn more about the stock market over time.

You might find this helpful: How to start investing

Should I invest to save up for a house?

If you’d like to buy a home in the next 3 to 5 years, investing your house deposit can be risky. Thanks to high-interest savings accounts such as Cash ISAs and Lifetime ISAs, it’s possible to make your deposit work for you without risking it on the stock market. The amount you’ll need to save will depend on your ideal property price, how much you can afford to borrow and how soon you’d like to buy.

For example, if someone is looking to buy a house worth around £200,000 in the next 4 years, they’ll usually need a deposit of around 10%, which comes to £20,000. To save that over 4 years, they would need to set aside £5,000 per year.

If you’re a first-time buyer, you can make your life easier and get on the property ladder sooner by saving your deposit in a Cash Lifetime ISA. You can save up to £4,000 a year in a Lifetime ISA (which works out at just over £333 a month) and the government will boost your LISA savings by 25%, giving you a free bonus of up to £1,000 each year. It works like this:

• Save up to £4,000 per tax year in a LISA.
• Receive a 25% government bonus on contributions up to that limit.
• Funds can be used towards purchasing a first home or towards retirement from age 60.

You can spread your £4,000 LISA allowance throughout the tax year or deposit a lump sum in one go, meaning you could potentially reach your £20,000 savings goal in just over 3 years if you make your final £4,000 payment at the start of the tax year.Find out more here.

How much should I invest in my 20s?

Your 20s are the perfect time to start investing, even if you’ve only just graduated or you earn a modest salary. That’s because of compound growth, where your returns start earning their own returns over time. 

For example, if you invest £100 and it grows by 10% in the first year, you’ll have £110. The next year, if it grows by another 10%, you’ll earn not just on your original £100 investment but also on the £10 growth too, giving you £121. It might seem like a small difference, but it adds up massively over time.

Now let’s imagine you invest £50 a month for 30 years and your investments grow by an average of 5% a year. You’ll have contributed £18,000 in total, but your pot could grow to around £41,600 with the help of compound growth. That’s more than double what you put in, simply by starting early and letting your investments do the heavy lifting.

If you can, try to invest 10 to 15% of your take-home pay each month. But don’t worry if that’s not realistic yet. Even £25 a month can make a big difference over a decade or two. The most important thing is consistency.

Perfect for you: Where to invest: 4 ways you could invest your money

How much should I invest in my 30s?

By your 30s, you might be earning more and starting to think about bigger goals, such as buying a home, having children, or increasing your retirement fund. A higher salary can make it easier to invest, but if you have larger living expenses or multiple goals you’d like to achieve at once, you may find it harder.

Try to invest 15% to 20% of your take-home pay if you can, but if that feels like too much, start small and increase your contributions each year. 

You could make a promise to yourself to increase your contributions each time you get a pay rise, that way you’ll make good progress on your investments without sacrificing too much in the present.

How much should I invest for retirement?

The ‘right’ amount depends on your age, income, and desired lifestyle later in life, but here are a few of the most straightforward strategies to help you get started. A popular rule of thumb is to save half your age as a percentage of your income. So if you’re 30, aim to invest about 15% of your salary into your pension and other long-term savings. If you’re 40, aim for 20%.

If you’re employed, make the most of your workplace pension, as employer contributions and tax relief can help you reach your desired retirement goals sooner. If you’re self-employed, a private pension or Stocks and Shares Lifetime ISA can be a great alternative.

Read more: How much pension do I need?

How much should I invest monthly?

There’s no one-size-fits-all number, so don’t put too much pressure on yourself to get it right straight away. It’s better to make small contributions regularly, rather than investing large lump sums you might need access to later. 

To recap, here are a few quick tips to make investing easier:

• Automate your payments so you don’t have to think about it
• Increase contributions when you get a pay rise or clear a debt
• Diversify your portfolio. Spreading your money across different asset types can reduce risk and smooth returns over time

Where should you invest?

If you’re employed, your first port of call should usually be your workplace pension. It’s one of the most tax-efficient ways to invest because you’ll get tax relief on your contributions, and your employer will also pay into it. Employers must contribute at least 3% of your income, but many will go further and match what you put in up to a certain limit. It’s worth checking your scheme details to see what you’re entitled to. After all, it’s essentially free money, and over time those matched contributions and tax benefits can make a huge difference to your retirement savings.

If you don’t have a workplace pension or you’re already contributing enough to get the full employer match, you could look at individual investment accounts like a Stocks and Shares ISA or a Lifetime ISA (LISA). 

Both offer generous tax benefits (you won’t pay Income Tax or Capital Gains Tax on your returns) and you’ll have more flexibility and control over your money than you would in a pension.

• Stocks and Shares ISA. You can invest up to £20,000 each tax year, and you can withdraw your money whenever you like — though remember, the value of your investments can rise and fall, so you might get back less than you put in.
• Stocks and Shares Lifetime ISA (LISA). Lifetime ISAs are designed for two main goals: buying your first home or saving for retirement. You can invest up to £4,000 a year, and the government will boost your contributions by 25%, up to a maximum of £1,000 per year. You’ll also benefit from tax-free growth on your investments. However, if you withdraw your money for any other reason before age 60, you’ll pay a 25% withdrawal penalty, which could mean getting back less than you contributed.

It’s a good idea to keep any money you might need in the next 2-5 years in cash, since investments can fluctuate in value. If you’re saving for your first home, you could open a Cash Lifetime ISA, which works in a similar way to a Stocks and Shares Lifetime ISA, except your money will of course be held in cash, earning interest, and waiting for you whenever you’re ready to buy.

If you want the flexibility to spend your money on whatever you choose, look for a high-interest savings account or Cash ISA.

*Based on saving £100 at the beginning of each month for 5-years. Calculations show at month 61 (after 5-years) Tembo customers saving at 4.10% would have £436.62 on average more than saving with Barclays, HSBC, NatWest or Lloyds. Accurate August 2025.